Lloyds Banking Group’s first quarter pre-tax profits have slumped 28 percent to £1.6billion due to increased competition in the mortgage market and higher costs.
Although its revenues for the three months to the end of March increased 22 percent to £11.3billion, its profits were hit by a combination of lower mortgage rates cutting its margins, a new Bank of England levy on lenders across the sector, and a £100million increase in its severance pay bill, following a round of redundancies.
However, Lloyds chief financial officer William Chalmers said that the bank expects the pressure on its margins to ease.
He said that the pressure on its margins from both people coming off their fixed rate mortgage deals and refinancing on lower rates offered by its rivals and increased competition for deposits to be lower in the second half of the year.
“Over the course of the year, we do expect those trends to start to inflect a little bit. In particular, we expect the deposit churn to stabilize over the course of the year,” he said. “At the end of the year, we do expect the margin to be taking a positive direction.”
Britain’s housing market is starting to see signs of recovery and as a result, Lloyds has revised its house prices forecast for this year from a decline of 2.2 percent to growth of 1.5 percent. For 2025, it now expects house prices to grow 0.8 percent, rather than the 0.5 percent it predicted earlier this year.
Elsewhere, financial technology Revolut plans to create1,500 new jobs, as part of plans to expand its headcount by 40 percent this year, chief executive Francesa Carlesi says. Revolut already hired 2,000 new staff in the first quarter of 2024, taking its total number of employees from 8,000 to 10,000.
The majority of the new jobs it will create will be in its sales, customer support and financial crime teams. Since it launched in 2015, Revolut has grown its customer base to over 40million users worldwide and expanded its offering from currency cards to a full suite of banking services to individuals and businesses.
