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Lloyds Banking Group said annual profits rose by more than 50% due to higher borrowing costs, but the company said it has increased its annual profit by more than 50% due to higher borrowing costs, but it has also cut back by 4% to cover potential costs associated with a major overhaul of historic car finance sales practices. He said he had secured £50m.
The banking group stands out as one of the UK’s largest car finance providers through its brand Black Horse.
Lloyds said its pre-tax profit in 2023 was £7.5bn, up 57% from £4.8bn in 2022 and above analysts’ expectations.
It would be a record profit for the group, which is Britain’s largest mortgage lender and includes the Halifax and Bank of Scotland brands.
This was achieved as underlying net interest income, the difference between loan income and deposit payments, increased by 5% to £13.8bn.
But the bank said it had set aside £450m of remediation costs to cover potential costs related to the financial regulator’s investigation into its historic car financing sales practices.
Last month, the Financial Conduct Authority (FCA) launched an investigation into whether companies could be held liable for high car loan charges after receiving a number of complaints.
The FCA said it will ensure that consumers receive compensation in an orderly and efficient manner where they are found to have suffered losses due to widespread misconduct.
Mr Lloyds said it was too early to say what the scale of the relief would be and he welcomed a watchdog review to provide clarity.
“Significant uncertainties remain regarding the extent of fraud and customer losses, if any, and the nature and timing of corrective actions, if any,” the bank said.
The £450m provision, which includes estimates of costs and potential compensation, could rise to a greater or lesser extent once the FCA completes its investigation.
But Lloyd’s chief financial officer William Chalmers, asked by reporters if he thought the Motor Finance Inquiry showed similarities with the PPI mis-selling scandal, said the Motor Finance Inquiry was “not a pre-remedy”. It’s different,” he emphasized.
Lloyds has had to pay billions of pounds to compensate customers who were fraudulently sold payment protection insurance from the mid-1990s.
Meanwhile, the group’s chief executive Charlie Nunn said last year that the bank was “committed to proactively supporting people and businesses through sustained cost-of-living pressures”.
By 2023, approximately 7.5 million customers have asked for help with their financial situation.
More customers moved money into savings accounts with higher interest rates last year, but Lloyds said the trend slowed slightly in the final months of the year.
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