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Lloyds accused of profiteering in interest rate scandal by passing on increases quickly to borrowers but less so to savers
Lloyds was accused of ‘profit-seeking’ after the results seemed to confirm claims that it was quick to pass rate hikes on to borrowers, but less so to savers.
Britain’s largest mortgage lender reported an 18 percent increase in net interest income – money it earns from the difference between the two – to £13.2 billion last year.
The bonus pool for its bankers rose 12 per cent to £446m, the highest since 2018, while CEO Charlie Nunn pocketed £3.8m. Lloyds said it was now ready to pass on more benefits from tariffs to customers.
Cautious: Latest Lloyds results seem to confirm claims that rate hikes were quickly passed on to borrowers, but less so to savers
But Dame Angela Eagle, Labor MP and member of the Treasury committee, said it “added the insult” by not acting sooner to help clients protect their nest eggs from inflation.
Eagle, who recently scolded bank bosses in a committee hearing for being “ungenerous” to depositors, said: “It looks like profit and it is.”
The group’s total pre-tax profit, which owns Halifax and Bank of Scotland, held steady at £6.9bn.
But that was partially skewed by a sum of £1.5bn set aside to cover loans that went bad during the expected economic downturn.
Underlying figures showed how it earned more from the difference between borrowing and savings rates.
The net interest margin, a measure of that difference, was 3.22 percent, the highest level according to quarterly figures dating back to the beginning of 2018.
For the year, the margin was 2.94 percent, the highest since before the financial crisis.
Lloyds said the increase in earnings from interest rate hikes had been brought forward and profitability would fall from fourth-quarter levels as competition for mortgage and savings customers causes it to offer better deals.
Chief financial officer William Chalmers said, “You see an increase in margins early in the rate increase cycle… the benefits of those rate increases begin to be shared among customers over the next several years.”
But Eagle said, “It proves the point that they’re not generous with savers.”
Sam Richardson, deputy editor at Which? Money, said: ‘If large banks are going to raise mortgage rates, then it is only right that they reward savers at the same time.’
Lloyds also forecast a gloomy outlook for the UK, with GDP down 1.2 percent and house prices falling 7 percent this year.
It also said the mortgage market was still 30 percent below its pre-mini-budget level and borrowing is expected to continue to slow.
- The taxpayer’s interest in NatWest has been reduced from 43.97 percent to 42.95 percent in the Treasury’s program to sell the interest. It was bailed out during the 2008 financial crisis with £45 billion of public money.