The group’s impairment charge of £1.04bn for the year so far was larger than its net credit of £853m. Lloyds said this charge was down to its revised economic outlook.
The group predicts that house price growth will fall 0.2 per cent in the first quarter of 2023 and drop further to a decline of 8.2 per cent by Q3. It expects the fall in house price growth to soften to declines of 7.9 per cent by Q4.
Lloyds also expects unemployment to rise to 5.4 per cent by the end of next year and foresees the base rate increasing to four per cent by Q4 2022, and staying at that level throughout 2023.
It also predicts a 0.1 per cent contraction in GDP by the end of 2023.
Lloyds’ mortgage book grows by £5.1bn
Loans and advances to customers rose two per cent to £456.3bn during the period compared to last year, and its open mortgage book grew by £5.1bn. In Q3, the open mortgage book increased by £1.8bn.
Its net income rose by 12 per cent to £13bn while its net interest income saw a 15 per cent increase to £9.5bn. Lloyds said this was driven by a stronger net interest margin, which sat at 2.84 per cent, up from 2.52 per cent. In Q3, its net interest margin was 2.98 per cent.
Charlie Nunn, group chief executive of Lloyds Banking Group, said: “In February, we announced an ambitious new strategy. While the operating environment has changed significantly since then, our customer focus remains unchanged. We continue to execute against our strategic goals, based on our objectives of transforming the business, while generating a stronger growth trajectory and enabling the group to deliver higher, more sustainable returns.
“Our income growth, balance sheet momentum and resilient customer franchise have enabled the group to deliver a robust financial performance and strong capital generation, alongside updated guidance for 2022. The current environment is concerning for many people and we are committed to maintaining support for our customers. The group’s resilient business model and prudent approach to risk position the group well to face the current macroeconomic uncertainties while generating enhanced returns for our shareholders.”
