Lloyds to cut 3,000 jobs as Brexit stings
200 branches to close amid tough economic outlook; first-half pretax profit at £2.45b
Lloyds Banking Group is to step up its cost-cutting plans to help offset a more testing economic environment caused by Britain’s vote to quit the European Union.
Britain’s largest retail bank aims to save £400 million ($528.56 million) by end2017 by axing a further 3,000 jobs and closing an additional 200 branches to protect its earnings and dividends against the effects of lowerfor-longer interest rates.
Lloyds, rescued in a £20.5-billion taxpayer bailout during the financial crisis, is the first major British bank to report results since the referendum and is the most exposed to any downturn in the British economy.
Lloyds reported a forecastbeating first-half statutory pretax profit of £2.45 billion ($3.3 billion) in the six months to June 30. This was more than double profits achieved in the same period last year, partly because it did not have to set aside money for loan insurance mis-selling.
Income for the first half of the year came in at £8.9 billion, just below the 2015 figure. Chief Executive Officer Antonio Horta-Osório is searching for ways to prop up Lloyds’ dividend, one of its key attractions, and sustain profit growth in its main UK consumer and commercial lending market, still reeling from the Brexit result.
Difficult future
“While the business will remain highly capital generative, it is possible that this capital generation may be somewhat lower in future years than previously guided,” the bank said in a statement yesterday.
So far this year, Lloyds has already said it would cut about 4,000 positions from its 75,000-strong workforce and has closed nearly 100 branches this year. The bank said it would look to sell off unwanted properties.
“Lloyds remains a nogrowth bank,” Ian Gordon, an analyst at Investec, said. “Its revenue outlook is flattish, hence its costs need to fall faster.” The bank also said Britain’s financial watchdog had opened an investigation into how it treated customers who had difficulty repaying their mortgages and said it had set aside £350 million for compensation.