Friday 23 February 2018

Lloyds boosted by slowdown in new Irish loan losses

Donal O'Donovan

Donal O'Donovan

Lloyds Banking Group has said the rate of new losses on its Irish loans slowed in the first half of the year, for the first time since the start of the debt crisis.

Lloyds is the UK's biggest bank. It owns Halifax Bank of Scotland, which was one of the biggest lenders in Ireland until the bank pulled out of the market here in 2010. The bank announced financial results for the first half of 2012 yesterday.

Yesterday the banking giant said it took a "credit charge" or impairment of £897m (€1.145bn) in the first half of the year, compared to £1.408bn in the second half of 2011.

The better figure is "primarily due to a reduction in new customers entering arrears," the bank said. The news came as Lloyds group, which is part-owned by the UK government, announced financial results for the first half of the year.

"The Irish economy appears to have grown in 2011 for the first time since 2007, by 1.4pc, and the unemployment rate appears to have stabilised," Lloyds said.

Loans losses in Ireland, however, remain huge. Impaired loans make up 66.9pc of the Irish loan book, up from 66pc in December. Lloyds has had to make £12bn of impairment charges on the Irish loans since the debt crisis began, according to data compiled by Bloomberg News.

The bank's financial news was overshadowed yesterday by an admission that it is a defendant in several Libor-related lawsuits, along with other large banks.

Overall figures for the bank as a whole show a loss before tax of €439m in the six months to June 30. That compared to losses of £2.3bn in the same period in 2011.

The big driver of this year's loss was €890m the bank was forced to set aside to cover expected compensation claims connected to the mis-selling of mortgage insurance.

It brings the total set aside to cover the claims to £4.4bn.

The bank thinks 22pc of Irish home loans are in some level of trouble compared to 85pc of commercial loans.

The bank's worldwide impairment charge was £3.2bn -- including the Irish cost. It's down 42pc on the figure recorded in the first half of 2011.

Irish Independent

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