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Lloyds reports jump in profit, but also hefty car finance charge

Published 02/22/2024, 06:04 PM
© Reuters.
- - Lloyds Banking Group (LON:LLOY) reported a substantial jump in profit for 2023 on Thursday, but the British lender also took a hefty charge for potential costs from a regulatory review into motor finance, hitting sentiment.

Lloyds reported pretax profit of £7.5 billion (£1 = $1.2674) for the 12-month period to the end of December, up from £4.8 billion the prior year, an increase of over 56%.

The group also announced a final dividend of 1.84p and a share buyback of £2 billion.

However, its share price fell 1.5% Thursday after the bank set aside £450 million to cover possible exposure given the ongoing regulatory review into suspected historic overcharging by car finance lenders, a market where Lloyds’ subsidiary Black Horse is a significant player.

"There remains significant uncertainty as to the extent of any misconduct and customer loss, if any, the nature of any remediation action, if required, and its timing. Hence the impact could materially differ from the provision, both higher or lower," said Lloyds chief executive Charlie Nunn.

Some analysts have claimed that the total compensation bill could run into the billions.

The bank also set aside £308 million to cover potential unpaid loans, well down on £1.5 billion the prior year, suggesting increased confidence in the health of the U.K. economy.


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