Lloyds 'stronger' despite £3bn loss

 

Part-nationalised Lloyds Banking Group said today that it is "in a significantly stronger position than it was 12 months ago" despite unveiling total losses of £3.5 billion for last year.

The losses, which compare with a £281 million profit the previous year and are driven by a £3.2 billion hit to tackle the payment protection insurance scandal, are nearly twice the size of those at fellow state-backed bank Royal Bank of Scotland.

However, stripping out the PPI charge and other one-off costs, the 40% state-owned bank made a £2.7 billion profit in 2011, up 21% on the same measure in the previous year.

Lloyds said its total bonus pool for last year was £375 million, down 30% against 2010, with the average bonus of £3,900 for each of its 100,000 staff.

In contrast to RBS, Lloyds, which has no investment banking arm, has managed to duck the bonus row so far, after its chief executive, Antonio Horta-Osorio, waived his bonus following an extended absence due to ill-health.

Mr Horta-Osorio reiterated earlier warnings that the bank expects its income-related targets to be delayed as a result of the weaker-than expected economic outlook, which will fuel fears that it will be several years before taxpayers get their money back.

In a particularly gloomy assessment of the outlook, the bank said it expected income to be lower in 2012, as demand for lending remains subdued and interest rates remain at record low levels for some time to come.

Mr Horta-Osorio said he expects "a subdued economy, continued high levels of regulatory scrutiny and political uncertainty" in the banking sector as well as ongoing instability in the eurozone.

The bank's combined exposure to troubled eurozone countries Portugal, Ireland, Italy, Greece and Spain totalled £25 billion, of which £16 billion related to Ireland.

However, the bank expects a further reduction in costs, and a similar percentage reduction in bad debts in 2012 as seen in 2011, as a result of improved asset quality across the group, particularly in its overseas markets, which it has pledged to cut.

The bank said it expected to increase cost savings by a further £200 million - but insisted this would not involve any additional job losses to the 15,000 already announced last year.

Lloyds said last year it beat its Project Merlin targets, after it provided £45 billion of gross lending to UK businesses, of which £12.5 billion was to small and medium-sized enterprises (SMEs).

The retail - or high street - bank saw net income slide 13% to £7.4 billion as demand for lending remained subdued and competition for deposits increased.

The group said it advanced more than £15.5 billion of new mortgages to more than 124,000 customers buying a home in the UK in 2011.

David Fleming, national officer of the Unite union, said: "Twenty eight thousand totally innocent Lloyds Banking Group employees have lost their jobs due to the poor management of this finance institution.Those now unemployed won't get a grain of comfort, nor will those still working hard in branches or call centres, from the fact that the investment bankers will have their bonus payments slightly reduced.

"It is vital that Lloyds Banking Group stops attempting to make scapegoats out of its workforce to make short-term cost savings. Instead they must recognise the ongoing commitment of those who day in day out deliver world class customer services on their behalf, not simply rewarding the city bankers."

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor