Tuesday 27 September 2016

Lloyds Bank to shed 3,000 jobs, close branches after Brexit shock

Published 28/07/2016 | 07:29

A woman uses a cash machine at a Lloyds Bank branch in central London. REUTERS/Paul Hackett
A woman uses a cash machine at a Lloyds Bank branch in central London. REUTERS/Paul Hackett

Lloyds Banking Group said it would accelerate its cost cutting plan to help offset a more testing economic environment and a likely drop in demand for credit caused by Britain's vote to quit the European Union.

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Britain's largest retail bank announced plans to save £400m by end-2017 by axing a further 3,000 jobs and closing an additional 200 branches to protect its earnings and ambitious dividend profile against lower-for-longer interest rates.

"Given the uncertainty, it is too early to determine the impact on our formal longer term guidance at this stage," the bank said in a statement.

"However, while the business will remain highly capital generative, it is possible that this capital generation may be somewhat lower in future years than previously guided."

Lloyds reported a first-half statutory pretax profit of £2.45bn in the six months to June 30, more than double the sum achieved in the same period last year.

That figure was just ahead of the £2.35bn average estimate of 15 analysts surveyed by the bank. Income for the first half of the year came in at£8.9bn, just below the 2015 figure.

The bank said its net interest margin (NIM) - a key performance measure that tracks the difference between what Lloyds receives in interest and lends out to customers – had widened to 2.74pc over the period. It affirmed previous guidance of about 2.7pc for the full financial year.

But a rise in impairments to £254m took the shine off the profit beat and robust NIM result and offered a glimpse into tougher times to come.

The bank said it will pay an interim dividend of 0.85 pence, leaving it with a common equity tier 1 ratio, a measure of financial strength, of 13pc after the payout.

Reuters

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