Lloyds Banking Group has revealed a massive drop in profit after taking a major hit from worsening economic conditions in the first three months of the year.
It said a massive £1.4 billion impairment charge had left profits in the doldrums.
Pre-tax profit plunged 95% to £74 million, down from more than £1.6 billion in the same three months of last year.
It marks a major challenge for the bank as it tries to prop up ailing businesses during the coronavirus crisis.
I would like to pay tribute to the exemplary dedication being shown by all our colleagues across the group providing vital banking services to those in need, but also in going above and beyond in countless and often unseen ways to support the most vulnerableAntonio Horta-Osorio, Lloyds Banking Group
Chief executive Antonio Horta-Osorio said: “The coronavirus pandemic presents an unprecedented social and economic challenge which is having a significant impact on people and businesses in the UK and around the world.
“The economic outlook is clearly challenging, with the longer-term outcome dependent on the severity and length of the pandemic and the mitigating impact of Government and other measures in the UK and across the world.”
Net income hit just under £4 billion, down from £4.4 billion in the same period last year. Profit after tax fell 60% to £480 million, while costs fell marginally to £1.96 billion.
The bank said it had lent around £500 million to some 3,752 small businesses as part of the Government’s Coronavirus Business Interruption Loan Scheme (CBILS).
It puts Lloyds behind many of its rivals – HSBC has lent £765.2 million, Barclays £738 million, and RBS £1.4 billion.
On a call with reporters, Mr Horta-Osorio said the group’s business customers largely preferred other support to the CBILS loans.
The bank has instead handed out 39,500 overdrafts, capital repayment holidays and deferred payments.
Mr Horta-Osario said the bank has approved “the vast majority” – more than 80% – of eligible CBILS loan applications.
Some customers have been turned away because they could not afford to pay the loans back, he said.
We remain committed to supporting our customers and colleagues over the weeks and months ahead through any interruptions they face as a result of #COVID19.— Lloyds Banking Group (@LBGplc) April 30, 2020
More info on our #coronavirus hub: https://t.co/eZpPoB2upU #LBGResults #LLOY $LYG pic.twitter.com/ALq15zqZhX
Around 83,000 motor finance customers have been given payment holidays, as have 175,000 customers who have taken out personal loans, and 219,000 credit card holders.
More than 400,000 mortgage-holders have also been granted a payment holiday.
The bank withdrew its financial guidance for investors, saying the longer-term impact of Covid-19 is not yet clear.
Both senior staff and executives will not be given a bonus this year, the bank told shareholders, who already had their dividends slashed last month.
Mr Horta-Osorio added: “I would like to pay tribute to the exemplary dedication being shown by all our colleagues across the group providing vital banking services to those in need, but also in going above and beyond in countless and often unseen ways to support the most vulnerable.”