According to its latest quarterly results, Lloyds said that there has been a £1.2bn drop in mortgages, which a spokesperson attributed to lower application volumes in Q4 and Q1.
This was “driven by the smaller market and our desire to maintain margins”.
The company said that overall loans and advances, fell £2.6bn to £452.3bn, which is due to legacy mortgage portfolio exit, an additional reduction of £600m in its open mortgage book and repayments of government-backed lending in commercial banking.
Its open mortgage book currently stands at around £298.6bn.
The group’s statutory profit before tax for the first three months of the year came to around £2.3bn, which is £716m up on the same period last year.
The company said that higher income, partly offset by higher operating expenses and the impact of an increased impairment charge, led to an “improved result”.
The impairment charge was around £243m, which is up from £177m in the same period last year.
Net income came to £4.7bn, which is up 15 per cent, which the firm said reflected “ongoing recovery and the higher rate environment”.
Net interest margin was 322 basis points, which it said was in line with the last quarter of last year. It added mortgage completion margins were circa 50 basis points in the first quarter of the year.
It continued that net interest margin was expected to be lower in the second quarter due to “expected headwinds from mortgages and deposit pricing”.
Lloyds said that there has been a modest increase in new arrears in some portfolios but said that this was from a “low base” and was still at or below “pre-pandemic levels”.
Charlie Nunn (pictured), Lloyds’ group chief executive, said: “The group has delivered a solid financial performance in the first quarter of 2023, with strong net income and capital generation, alongside resilient observed asset quality.
“The macroeconomic outlook remains uncertain. We know that this is challenging for many people. Our purpose driven strategy, alongside our financial strength, means we can continue to support our customers across the country, helping Britain prosper.”
He added: “We are also making good progress on our ambitious plans to transform the group. Our experience over the last year reinforces our belief that continued strategic delivery will create a more sustainable business and deliver increased returns for our shareholders in the medium to longer-term.”
