William Chalmers, Lloyds’ chief financial officer, said the lender had received a strong level of mortgage applications throughout the year
Lloyds Banking Group has reported stronger-than-expected earnings in recent months, attributing this to increased consumer confidence.
The banking giant posted a pre-tax profit of £1.8bn between July and September, which is about 2% lower than the £1.9bn generated during the same period last year. However, this figure significantly exceeded analysts’ expectations, who had predicted a profit of around £1.6bn for the third quarter.
Lloyds also reported a 6% year-on-year decline in its underlying net interest income, as customers continued to refinance their mortgages onto lower-rate deals. Despite this, the bank noted an increase in financial confidence among its customers as cost-of-living pressures begin to ease.
It revealed a 5% rise in non-essential spending among its customers over the first nine months of the year, while average energy bill spending fell by nearly 20%. Additionally, the bank highlighted that average charitable giving was about a quarter higher than this time last year. William Chalmers, Lloyds’ chief financial officer, said the lender had received a strong level of mortgage applications throughout the year.
The total lending to customers has seen a rise over the last quarter and Mr Chalmers anticipates further growth in lending activity throughout 2024, with predictions of a 1.3% increase in house prices this year.
Mr Chalmers said Lloyds, which owns Halifax and is the UK’s largest mortgage lender, was looking forward to getting “clarity” from the upcoming autumn Budget.
“We hope the Budget will be a confidence-boosting event when it comes around, but there has clearly been a period of uncertainty before that,” he explained. He noted that consumer behaviour hasn’t greatly shifted due to this uncertainty, although there’s been a slight uptick in pension withdrawals as individuals brace for potential tax changes.
Mr Chalmers remarked that a “pro-growth” Budget, featuring initiatives to encourage investment, would benefit the mortgage market. The finance boss also suggested that any increases in tax rates for banks announced in the Budget could impact the UK’s stature as a leading financial hub.
He stated: “The bank sector – and certainly we at Lloyds – are one of the UK’s largest taxpayers already, and actually we take some pride in making our contribution to the society of which we are apart.”
He further stressed the importance of maintaining a competitive and steady tax landscape to foster the kind of investment and lending that aligns with their growth strategy.
Charlie Nunn, the Chief Executive of Lloyds, stated that the bank is “making good progress on our strategy and remain on track to deliver higher, more sustainable returns” while “continuing to provide support to our customers”.
