Lloyds blow in mortgage war

PROFITS FALL AS COMPETITION HOTS UP

PROFITS at Lloyds Banking Group fell by more than a quarter amid higher costs and competition between mortgage lenders.

The bank made £1.6billion profits in the first three months of this year – but that was down 28 per cent from the £2.3billion it made in last year’s first quarter.

Lloyds said it was partially driven by a squeeze on the difference it makes from borrowers and pays savers.

This was expected as mortgage costs ease from the highs hit during the start of last year and as more savers moved cash into accounts with better interest rates.

Lloyds also blamed a new sector-wide Bank of England levy on lenders and a £100million additional charge to cover employee layoffs. Finance chief William Chalmers said it expected pressures on margins “to ease through 2024”. Richard Hunter, head of markets at online platform Interactive Investor, said: “Lloyds has kicked off the quarterly reporting season for the banks in generally uninspiring style, although there are some signs performance could tick higher as the year progresses.” New projections provided by Lloyds point to an improved economic outlook. Average house prices are expected to rise by 1.5 per cent this year, with Lloyds previously forecasting a 2.2 per cent fall. It also expects the unemployment rate to average at 4.3 per cent over 2024.