Lloyds hails ‘resilent’ economy despite EU uncertainty

BRITAIN’S biggest high street bank Lloyds yesterday hailed a “resilient” economy that helped lift its finances in the first half of the year, and insisted it could cope even in the event of an abrupt exit from the EU.

António Horta-osório, its chief executive, said the economy had held up despite the uncertainty caused by Brexit. The bank was “prepared to do exactly what companies need in order to adapt” depending on the outcome of negotiations, he said. The Daily Telegraph revealed on Monday that big banks are privately drawing up plans to support companies if a “no deal” exit leads to a cash crunch due to delays in cross-border shipments and payments.

Mr Horta-osório did not expand on how Lloyds might help businesses, but said he was confident an agreement would be reached: “I’m strongly convinced a deal will be agreed by the EU and UK.”

A much-anticipated interest rate rise by the Bank of England today would also boost the bank, although its finance director George Culmer said it would not change profit guidance for this year. City analysts expect a rise in the base rate, to 0.75pc, to lift profits across UK banks by £500m a year.

Lloyds posted £3.1bn of pre-tax profits for the first half of the year, up 23pc. Its shares closed up 1.0pc at 63.41p.

The rise in profits was driven by better profitability on lending and a lower provision for meeting claims for misselling payment protection insurance (PPI), despite having to set aside a further £460m in the second quarter.

The PPI provision was up sharply from a £50m addition after the first quarter. The total cost now stands more than £19.2bn.

Mr Horta-osório also made a surprise commitment to Lloyds maintaining the country’s biggest branch network, despite announcing nearly 100 closures over the past nine months.

He said this would be a “clear source of competitive advantage” as rivals made deep cuts. RBS has cut more than a quarter of its network this year.

The chief executive also said Lloyds was “determined to get to the bottom of what went wrong” with the fraud at HBOS Reading, following MPS’ at recent criticism of how the bank handled the scandal. Six people were jailed over the scam, which defrauded customers from 2002-7 before HBOS was taken over, and Lloyds is still the subject of separate inquiries by City regulators and retired judge Dame Linda Dobbs.

Impairments on bad loans increased 70pc to £456m for the period, but Mr Horta-osório said he had seen no red flags with more customers unable to pay their debts. “There are no signs across all our portfolios of deterioration, including credit cards.”