Lloyds Bank urged customers struggling with the cost of living to get in touch as it set aside £177million to cover loans it expects to turn sour.
The lender, which is often seen as a bellwether for the economy as it serves around 30million Britons, said it was ‘very aware’ of the problems that red-hot inflation could cause for its customers.
But despite the warnings, it still pulled in profits of £1.6billion in the first quarter of the year, well above expectations of £1.4billion, though down from £1.9billion a year earlier.
Emergency fund: Lloyds, which is often seen as a bellwether for the economy, said it was ‘very aware’ of the problems that red-hot inflation could cause for its customers
Lloyds also raised its profit forecasts for the full year, even with the looming threat that inflation may rise above 10 per cent later in the year.
Economists are worried this could cause the country’s Covid recovery to grind to a halt and even tip the economy into recession.
William Chalmers, chief financial officer at the banking group, said 1.2m customers have already cancelled subscription services since last summer.
Charlie Nunn, the lender’s chief executive, said: ‘We encourage customers, where affected, to get advice early and talk to us.’
Despite the gloom hanging over the economy, investors were relieved to see the bank is not expecting to book any further charges relating to the HBOS Reading scandal.
In January 2017, six people including two former employees of HBOS – rescued by Lloyds in the financial crisis – were jailed for up to 12 years for conspiracy to corrupt, fraudulent trading and money laundering between 2003 and 2007, after running small business customers into the ground and milking them for cash.
Last year, the bank was forced to set aside another £790million for compensation, taking the total to £1.2billion.
But Lloyds said yesterday: ‘There have been no further charges relating to HBOS Reading since the year end and the provision held continues to reflect the group’s estimate of its full liability, albeit significant uncertainties remain.’
