Britain’s Lloyds says profits up 5%, even as economic outlook dims

[LONDON] Lloyds Banking Group reported its profit for the first half of the year rose 5 per cent, beating analysts’ forecasts, as income grew even as it faces a murkier economic outlook and rising corporate defaults.

The British lender said on Thursday (Jul 24) statutory profit before tax for the first six months of the year of £3.5 billion (S$6.05 billion), up 5 per cent year-on-year and just above the average of analysts’ forecasts of £3.2 billion.

The bank also said it would pay an interim ordinary dividend of 1.22 pence per share, equivalent to £731 million, up 15 per cent on the prior year.

The performance update from Britain’s biggest mortgage lender showed it maintaining a strong performance, even as storm clouds gather in the economy and it faces the outcome of a crucial UK court ruling on motor finance.

Lloyds maintained its performance targets for the year, as improved house price expectations helped offset a decline in its economic outlook including higher unemployment expectations.

The lender also took an impairment charge of £442 million, up from 101 million the year before, which it said included a small number of companies in one sector – which it did not name – moving to default during the six-month period.

The bank’s quarterly performance numbers could be overshadowed in the coming days by the outcome of a landmark Supreme Court ruling on a probe into Britain’s motor finance sector.

Lloyds is among the lenders most exposed to an adverse ruling on the cases about how banks disclosed historical commissions paid on car finance deals, and which analysts have said could cost the banking industry up to £30 billion.

Motor finance meanwhile performed well for the bank, as fleet growth and higher average vehicle rental values helped drive total income for the half-year to £9.4 billion, an increase of 6 per cent on the same period in 2024. REUTERS