Lloyds Bank’s interim management statement for the third quarter shows a stronger mortgage portfolio. As of September 30, 2024, this figure was £310.1 billion, compared to £306.9 billion at the end of June 2024 – representing an increase of 1%.
The bank reported statutory pre-tax profits of £1.82 billion for the July-September period, down slightly from £1.86 billion a year ago but higher than the average analyst forecast of £1.6 billion.
For the nine months to the end of September, the bank reports statutory profit after tax of £3.8 billion, down from £4.3 billion for the same period in 2023.
Net profit also fell by 7% year-on-year and operating costs increased by 5% (including the Bank of England Levy), partly offset by lower impairment.
Commenting on the latest figures, Charlie Nunn, CEO of Lloyds Group, said: “The Group delivered a robust financial performance in the third quarter of 2024, with revenue growth alongside continued cost discipline and strong asset quality. Our performance allows us to confidently reaffirm our 2024 guidance.”
He added: “We are making good progress with our strategy and remain on track to deliver higher, more sustainable returns. As always, we are guided by our purpose to help Britain prosper and continue to support our customers. The strength of the group’s franchise, in addition to our financial performance, allows us to deliver results for all stakeholders.”
AJ Bell investment director Russ Mold said there were concerns about the impact on consumer confidence from pre-budget speculation, but Lloyds painted a picture of improvement as pre-tax profits in the third quarter exceeded expectations.
“The blow was caused by lower than expected impairments. The amount of bad debt being built up is still low and the bank and its customers will be hoping that we are now past the worst of the cost of living.”
He added: “The other big positive surprise for investors was the quarter-on-quarter increase in net interest margin – measuring the difference between what the bank pays out to savers and what the bank charges to those it lends to .
“The quarterly increase in this key metric followed five quarters of decline and helped increase the credibility of the company’s full-year target.”
Looking at the broader picture of mortgage rates, Lloyds chief Nunn told the BBC’s Laura Kuenssberg earlier this month that he expects mortgage rates to fallbut not to the near-zero numbers we saw in the 2010s.
Asked if ‘cheap; mortgage deals would ever return, Nunn replied: “We think so [mortgage rates] will continue to fall, but a return to the levels of the past ten years, when interest rates fell to zero, seems unlikely to me.”