Mortgate rates and bill for job cuts dent Lloyds profits
LLOYDS Banking Group’s first quarter pre-tax profits slumped 28% to £1.6billion due to increased competition in the mortgage market and higher costs.
Its revenues for the three months to the end of March soared 22% to £11.3billion.
But profits were hit by a combination of lower mortgage rates cutting its margins, a new Bank of England levy on lenders and a £100million rise in its severance pay bill, following redundancies.
However, Lloyds chief financial officer William Chalmers said the bank expects the pressure on its margins to ease.
He said that it came from people coming off their fixed-rate mortgage deals and refinancing on lower rates offered by its rivals and increased competition for deposits to be lower in the second half of the year.
Mr Chalmers added: “Over the course of the year, we do expect those trends to start to inflect a little bit.
“In particular, we expect the deposit churn to stabilise over the course of the year. At the end of the year, we do expect the margin to be taking a positive direction.”
Britain’s housing market is starting to see signs of recovery and as a result, Lloyds has revised its house prices forecast for this year from a decline of 2.2% to growth of 1.5%. For 2025, it now expects house prices to rise 0.8%, rather than the 0.5% it predicted earlier this year.
Elsewhere, financial technology company Revolut plans to create 1,500 new jobs by the end of the year, expanding its headcount by 40%, chief executive Francesca Carlesi says.
Revolut has already hired 2,000 new staff in the first quarter of 2024, taking its total number of employees to 10,000.
The majority of the new jobs it will create will be in its sales, customer support and financial crime teams.
Since it launched in 2015, Revolut has expanded its customer base to over 40 million users worldwide and increased its offering from currency cards to a full suite of banking services to individuals and businesses.