The British bank Lloyds announced Thursday a profit down 28% over one year since the beginning of the year, penalized by provisions for possible credit defaults in a difficult economic context for both businesses and households.
Net profit group share reached 3.6 billion pounds for the first nine months of the year, while turnover increased by 8% to 13.3 billion pounds, benefiting in particular from a strong increase in revenue related to credits, while interest rates are soaring.
The result was a £1billion credit default provision as the UK economy is on the brink of recession with interest rates rising sharply, which is expected to add to the financial difficulties of many households and businesses. .
Tax charges also increased over one year, but operating costs fell slightly.
The current environment worries many people and we are committed to supporting our customers. The group’s resilient business model and our cautious approach to risk position us well against macroeconomic uncertainties, Chief Executive Charlie Nunn said in the statement.
These figures are on the whole quite good but it seems clear that Lloyds is preparing for a storm in the economy with a sharp rise in provisions on non-performing loans and this is why the results are lower than expected. , comments Michael Hewson, analyst at CMC Markets.
Lloyds, which has the largest network of bank branches in the country, is particularly dependent on the development of the British economy since it is above all a retail bank, offering services to individuals and businesses.
However, the British economy is accumulating difficulties, with in particular inflation returning in September to slightly above 10%, the highest figure of the G7 countries.
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The fact that Lloyds is setting aside more than double what analysts had expected is therefore a bad sign for the British economy, according to Laith Khalaf, analyst at AJ Bell.
Faced with price increases, the Bank of England was one of the first major central banks to start raising its key rate at the end of 2021, and it is now set at 2.25%.
The whole of the banking sector saw its results improved by interest rates in the third quarter, which boosted the yield of loans and bond or derivative products, but like Lloyds, its competitors HSBC or Barclays also passed large provisions for losses .
After opening in negative territory, Lloyds shares rose slightly by 0.22% to 42.64 pence shortly after 1000 GMT on the London Stock Exchange.