Lloyds Bank profits double as borrowing costs rise

Lloyds Banking Group has said its profits nearly doubled in the final three months of 2022 as its loan book swelled and interest rates increased.

The UK’s largest lender said its quarterly statutory pre-tax profit was £1.8bn, up from £968m over the same period in 2021.

This takes its full-year earnings to £6.9 billion, the same as in 2021.

The group saw its net interest income surge by nearly a fifth to £13.2bn in 2022 as it benefited from higher borrowing costs and a boost to its net interest margin – which shows the difference between what a bank charges for loans and pays for savings.

Its loan book surged by £6.3bn to a mammoth £475bn over the year.

But the lender revealed it had put aside £1.5bn in credit provisions as it cautioned over an uncertain economic outlook and an uplift in borrowers defaulting on loans this year.

It said in the fourth quarter it had observed a small increase in defaults, but that credit performance was generally strong despite the cost-of-living crisis.

Nevertheless, the group’s chief executive, Charlie Nunn, took home a total pay packet worth £3.8m for 2022, including a £1.3m shares bonus.

Lloyds’ annual report also showed the bank’s staff bonus pool increased by 12% to £446m “as a result of the group’s strong performance in 2022”.

Mr Nunn said: “While the operating environment has changed significantly over the last year, the group has delivered a robust financial performance with strong income growth, continued franchise strength and strong capital generation, enabling increased capital returns for shareholders.

“We know that the current environment continues to be challenging for many people and have mobilised the organisation to further support our customers.

“Our purpose-driven strategy is more relevant now than ever before. We remain committed to helping Britain prosper and helping the country recover from the current economic uncertainties.”