Lloyds Bank profits plunge 95 per cent as lender forecasts coronavirus will cause £1.4bn of bad debts
Bank expectes surge in number of people who cannot pay back their borrowing as Covid-19 hits households
Lloyds Banking Group has revealed a massive drop in profit after taking a major hit from worsening economic conditions in the first three months of the year.
It said a massive £1.4bn impairment charge had left profits in the doldrums. Pre-tax profit plunged 95 per cent to £74m, down from more than £1.6 billion in the same three months of last year.
It marks a major challenge for the bank as it tries to prop up ailing businesses during the coronavirus crisis.
Chief executive Antonio Horta-Osorio said: "The coronavirus pandemic presents an unprecedented social and economic challenge which is having a significant impact on people and businesses in the UK and around the world.
"The economic outlook is clearly challenging, with the longer-term outcome dependent on the severity and length of the pandemic and the mitigating impact of Government and other measures in the UK and across the world."
Net income hit just under £4bn, down from £4.4bn in the same period last year. Profit after tax fell 60 per cent to £480m, while costs fell marginally to £2bn.
The bank said it had lent around £410m to some 3,000 small businesses as part of the government's Coronavirus Business Interruption Loan Scheme (CBILS).
It has also given payment holidays to 83,000 motor finance customers, 175,000 customers who have taken out personal loans, and 219,000 credit card holders.
More than 400,000 mortgage-holders have also been granted a payment holiday.
The bank withdrew its financial guidance for investors, saying the longer-term impact of Covid-19 is not yet clear.
Both senior staff and executives will not be given a bonus this year, the bank told investors, who already had their dividends slashed last month.
Mr Horta-Osorio added: "I would like to pay tribute to the exemplary dedication being shown by all our colleagues across the group providing vital banking services to those in need, but also in going above and beyond in countless and often unseen ways to support the most vulnerable."