The boss of Lloyds Banking Group has informed Sky News a “mortgage shock” is awaiting round 200,000 of its dwelling mortgage clients.
In an interview with Ian King Live, Charlie Nunn mentioned 20% of its mortgage clients have been on account of exit a hard and fast price deal this yr and it was actively talking to many households about affordability given hikes to charges over the previous yr.
“Where we’re really focused as a bank is looking at those customers that are going to have an increase in their mortgage payments which is going to increase their interest they pay as a percentage of their income”, he mentioned.
“There’s less than 1% of our customers that we think are going to have a mortgage interest shock like that and what we’ve been doing is quietly reaching out to them.”
He was talking hours after the group revealed a provision of £1.5bn final yr – £500m of it within the remaining quarter – for dangerous loans forward.
The group fears defaults might rise on account of increased rates of interest – principally a consequence of Bank of England efforts to fight inflation – combining with the broader price of dwelling disaster to squeeze budgets additional.
Lloyds reported a 12% improve in its bonus pool for 2022 regardless of pre-tax income remaining flat on the earlier yr.
Earnings of £6.9bn for the 12 months matched the sum achieved in 2021, regardless that income had risen 14% to £18bn.
The 12% rise within the bonus pool to £446m, revealed individually within the financial institution’s annual report, is above the height price of inflation seen over the yr.
Mr Nunn took £1.33m of that sum, the doc mentioned, plus a long-term share plan award of 150% of his wage.
It took his whole awards to £3.8m.
The financial institution, which includes Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows, additionally introduced it could pay a 1.6p per share remaining dividend and a share buyback of as much as £2bn.
It quantities to £3.6bn of shareholder returns.
The group mentioned rising rates of interest and additions to its mortgage e book helped income nearly double over the ultimate three months of 2022.
The latter rose by £6.3bn to £475bn over the yr.
Mr Nunn informed traders: “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 present setting continues to be difficult for many individuals and have mobilised the organisation to additional assist our clients.
“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.”
Shares fell again by 2% on the market opening.
John Moore, senior funding supervisor at RBC Brewin Dolphin, mentioned: “Lloyds has finished off the major UK banks’ results season with a performance that is 80% NatWest and 20% Barclays.
“Profits have been flat year-on-year, with dangerous mortgage provisions including additional prices, amongst different shifting components.
“The bank has a history of prioritising its dividend, which is up 20% on last year, and acts as a good indicator of sentiment from management.
“Alongside the dividend improve is a £2bn share buyback programme, underpinned by enhanced steering for the years forward – all of which suggests a comparatively optimistic outlook for Lloyds.”
Source: information.sky.com”