In its annual results for 2015, lending at the bank rose dipped by 2.5% to £39bn down from gross mortgage lending of £40bn. This compares with a 13% boost to gross mortgage lending at the bank in 2014.
The 1% growth in net lending was below a mortgage market growth of around 2.5% as the lender took “the conscious decision” to protect its margin in what it called a “highly competitive, low growth environment”.
The TSB sale has been another ongoing cost of £2.4bn over the last five years with another £745m in disposal costs logged in 2015.
Underlying profit at the group, however, grew by 5% in 2015 to £8.1bn despite a £4bn Payment Protection Insurance provision, with £2.1bn in Q4 alone.
The group’s chief executive António Horta-Osório said: “We have taken the conscious decision…to balance margin considerations with volume growth in the mortgage business, growing our open book by around 1% versus a market that grew by around 2.5%. We believe this is the right approach as the leader in what is, at the moment, a low growth market where growth is predominantly coming from buy to let.”
From April the buy-to-let market will begin to feel the brunt of tax changes imposed by the government including a 3% stamp duty premium on subsequent properties and a reduction to landlord mortgage interest relief from 2017.
The value of mortgages greater than three months in arrears, excluding repossessions, decreased by £439m to £5,905m at the bank last year, with reductions in both the mainstream and buy-to-let portfolios.
Meanwhile, the average loan-to-value for new residential mortgages written in 2015 was slightly below 2014 at 64.7% compared with 64.8% a year earlier.
Lloyds added that it would continue to focus on its integrated, multi-channel approach to support customers in its branch network.
Horta-Osório said: “We have now launched our remote advice proposition, enabling customers to interact with us from the comfort of their own homes. In 2015 we also enhanced a number of customer processes, having launched an online feature which enables customers to obtain a mortgage agreement in principle in real time, and piloted a new process which has halved the time to open a new business bank account.”
