Lloyds accused of profiteering in rates scandal

Lloyds was accused of ‘profiteering’ after its results appeared to confirm claims it was quick to pass on interest rate hikes to borrowers but less so to savers.

Britain’s biggest mortgage lender reported an 18 per cent surge in net interest income – money it makes from the difference between the two – to £13.2billion for last year.

The bonus pool for its bankers rose by 12 per cent to £446million, the highest since 2018, while chief executive Charlie Nunn took £3.8million. Lloyds said it was now ready to pass on more benefits from rates to customers.

Holding back: Lloyds latest results appear to confirm claims it was quick to pass on interest rate hikes to borrowers but less so to savers

But Labour MP and Commons Treasury committee member Dame Angela Eagle said it was ‘adding insult to injury’ by not acting sooner to help customers protect their nest eggs from inflation.

Eagle, who recently lambasted bank bosses in a committee hearing for being ‘ungenerous’ with savers, said: ‘It looks like profiteering and it is profiteering.’

Overall pre-tax profits across the group, which owns Halifax and Bank of Scotland, were flat at £6.9billion. 

But that was partly skewed by a £1.5billion sum put aside to cover for loans going bad amid the expected economic downturn.

Underlying figures showed how it was making more money from the difference between borrowing and savings rates.

The net interest margin, a measure of that gap, hit 3.22 per cent, the highest it has been according to quarterly figures going back to the start of 2018.

For the year, the margin was 2.94 per cent – the highest since before the financial crisis.

Lloyds said the boost to its bottom line from interest rate hikes had been front-loaded and profitability would fall from its fourth quarter level as competition for mortgage and savings customers make it offer better deals. 

Chief financial officer William Chalmers said: ‘You see a rise in margins early on in the rate rising cycle… the benefits of those rising rates start to be distributed to customers over the course of the years thereafter.’

But Eagle said: ‘It proves the point that they are being ungenerous with savers.’

Sam Richardson, deputy editor at Which? Money, said: ‘If high street banks are going to raise mortgage interest rates, then it’s only right that they should reward savers at the same time.’

Lloyds also predicted a gloomy outlook for the UK, with a 1.2 per cent GDP fall and 7 per cent slide in house prices this year.

It also said the mortgage market was still at 30 per cent below its level from before the mini-Budget and borrowing looked set to continue to slow.

• The taxpayer’s stake in NatWest has been cut to 42.95 per cent from 43.97 per cent in the Treasury’s programme to sell down the stake. It was bailed out in the 2008 financial crisis with £45billion of public money.

This post first appeared on Dailymail.co.uk