Lloyds reports £3.5bn loss for 2011

Keighley News: Lloyds Banking Group took a 3.2 billion pound hit to tackle the payment protection insurance scandal Lloyds Banking Group took a 3.2 billion pound hit to tackle the payment protection insurance scandal

Part-nationalised Lloyds Banking Group said 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 (PPI) 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 an 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. 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.

click2find

About cookies

We want you to enjoy your visit to our website. That's why we use cookies to enhance your experience. By staying on our website you agree to our use of cookies. Find out more about the cookies we use.

I agree