It also noted it had improved its mortgage broker systems and published a strategic review focusing on further digital transformation over the next three years.
According to the lender’s results it increased its open mortgage book by £1bn to £267.1bn.
Lloyds, which includes Halifax and Bank of Scotland brands, said: “In the competitive low growth mortgage market we have focused on protecting margin rather than achieving volume growth over the last couple of years, though the open mortgage book returned to growth in 2017.
In 2016 according to Council of Mortgage Lenders (now UK Finance) data, the group was the biggest mortgage lender totalling £38.3bn, down £100m, with a 15.6% market share, down 1.7%.
Improving LTVs
During 2017, Lloyds drew down a further £15.4bn from the Bank of England’s Term Funding Scheme (TFS) to fully utilise its £20bn allocation at 31 December 2017.
It also has £25.1bn outstanding under the Bank of England’s Funding for Lending Scheme (FLS), down from £30.1bn at 31 December 2016.
The lender cut the average loan-to-value across much of its mortgage book during 2017.
The average indexed LTV improved to 43.6% from 44%, with the average LTV for new mortgages written in 2017 at 63%, down from 64.4%.
It’s total of mortgages with an indexed LTV of more than 80% fell to £30.7bn, from £32.4bn.
Leverage multiple brands and channels
Technology improvements are a clear focus for the lender. It said: “We have focused on transforming key customer journeys and have made significant improvements, including faster processing of new mortgage applications and simpler processes for account opening.
“In addition we have developed an open banking platform in line with regulatory timescales.”
The lender appears likely to increasingly centre on its customer-facing technology development and to make better use of its multiple brands and channels.
Key actions of the 2018 – 2020 strategic plan announced alongside the results are:
- Transform the group into a digitised, simple, low risk, customer focused, UK financial services provider;
- Leverage our multi-brand and multi-channel model, including the UK’s largest digital bank and branch network, to be the best bank for customers;
- Invest more than £3bn in strategic initiatives, an increase of more than 40% on the previous strategy, to further enhance customer propositions, further digitise the group, maximise capabilities as an integrated financial service provider and transform the way we work.
Many positives
Overall, the results showed profit before tax at £5.3bn, 24% up on 2016, with underlying profit of £8.5bn, 8% higher than the previous year.
The Share Centre investment research analyst Helal Miah said that despite the results falling short of analyst expectations there were many positives to take away. However, the issue of PPI claims has not entirely gone away, and for 2017 the bank made another £1.65bn of provisions – more than expected.
“We are seeing a bank heading in the right direction after a decade-long process of restructuring following the financial crisis,” he said.
“Overall, these are a good set of results for one of the lower risk banks in the UK. We would not discourage income seeking investors from looking at the group, but still believe some uncertainties remain in the banking sector.”
