Lloyds cutting costs as profit slumps by 72%
LLOYDS Banking Group plans to expand its wealth management and insurance divisions and cut more costs after seeing profits nosedive during the pandemic.
Its 2020 pre-tax profits fell 72 per cent to £1.2billion, due largely to Lloyds setting aside £4.2billion to cover loans expected to turn sour owing to Covid.
That compares with likely 2019 credit losses of £1.3billion.
Lloyds is also under pressure due to ultra-low interest rates.
The bank said its revenues plunged 16 per cent last year to £14.4billion.
As a result, Britain’s biggest domestic lender will focus on growing its insurance and wealth management divisions.
It will also cut costs by increasing the digitisation of its operations and reducing its office space by 20 per cent over the next three years. Last year, Lloyds cut more than a thousand jobs as part of its modernisation drive.
Outgoing Lloyds chief executive
Antonio Horta-Osorio warned that the earnings outlook is uncertain, despite the rollout of vaccines.
The Portuguese banker said: “The impact of the coronavirus pandemic on the people, businesses and communities in the UK and around the world in 2020 has been profound.
“We remain absolutely focused on working together with all of our stakeholders to support our customers and ensure a sustainable recovery.
“Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world.” Lloyds benefited from the housing market boom that started after the first lockdown last year ended. The bank said its mortgage book grew by £7.2billion last year to £277.3billion.