Lloyds profits plunge by 72% to £1.2bn

Lloyds Banking Group saw pre-tax profits drop by 72 per cent to £1.2 billion in 2020, largely due to an impairment charge of £4.2 billion.

The charge included £3.8 billion in the first half of the year and a management overlay of £400 million applied in the second half as a result of ongoing uncertainties surrounding the pandemic.

The bank said the numbers reflected a “significant deterioration in the economic outlook” due to the coronavirus crisis.

This year the bank aims to build on its insurance and wealth offering, as well as create a leading digital SME proposition and a “a disciplined and strengthened corporate and institutional client offering.”

Lloyds said that it wanted to enhance its core capabilities by investing in modernised technology architecture and integrated payment solutions to make it a “truly data-driven organisation.”

“The Group's unique business model, customer focused strategy and transformation in recent years positioned us well to respond effectively to the needs of our customers in 2020,” said António Horta-Osório, group chief executive. “At the same time, the Group’s financial performance in the year has been impacted by the pandemic.”

He said that despite the significant impairment charge taken in predominantly the first half of 2020, Lloyds still delivered a statutory profit after tax of £1.4 billion.

“We are now seeing positive developments in the business, including growth of £10.2 billion in the open mortgage book in the second half of the year and total deposits up £39 billion in the year, the latter given curtailed retail spending and inflows to our trusted brands,” he said. “I am deeply proud of the vital work that has been done by Lloyds Banking Group to support the UK economy and to help Britain recover throughout 2020.”

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