In its results for 2023, Lloyds Banking Group said its rise in profit was driven by a change in International Financial Reporting Standards (IFRS) – 17 accounting changes in 2022.
Its net interest margin (NIM) dropped by 0.1 per cent to 2.98 per cent in Q4, which Lloyds attributed to mortgage pricing and deposit headwinds.
Its NIM was 3.11 per cent for 2023, up from 2.94 per cent the year before.
For 2024, it expects its NIM to be greater than 2.9 per cent.
Its financial results showed that its total mortgage loans and advances fell from £312.7bn to £307.6bn, and its book had an average loan to value (LTV) of 43.6 per cent, up from 41.6 per cent.
Lloyds’ open mortgage book was relatively unchanged at £298.5bn.
The share of loans with an LTV higher than 90 per cent rose from 1.4 per cent at the end of 2022, to 2.9 per cent as of 31 December 2023.
The average LTV of new business was flat at 61.7 per cent.
Lloyds Banking Group said the level of mortgage borrowers who had recently fallen into arrears was stable in 2023 after a small rise at the start of the year. There was a rise in defaulting borrowers, due to legacy variable rate mortgages, and this also settled in the latter half of the year.
Some 1.3 per cent of its mainstream mortgage book was in more than three months of arrears, slightly up from 1.1 per cent the year before. There was a greater rise among buy-to-let (BTL) borrowers in more than three months of arrears, up from 0.8 per cent to 1.4 per cent.
Charlie Nunn (pictured), group chief executive of Lloyds Banking Group, said: “The group delivered a robust financial performance, meeting our 2023 guidance, driven by income growth, cost discipline and strong asset quality. This performance enabled strong capital generation and increased shareholder distributions.
“2023 was a critical year in building towards the ambitious strategy we announced two years ago, as we look to grow our business and deepen relationships with our customers. As demonstrated in our recent strategic seminars, we have made significant progress and are on track to meet our 2024 and 2026 strategic outcomes, helping us build towards higher and more sustainable returns.
“Our strategy is purpose-driven. Building a more sustainable and inclusive future is central to this, including our commitment to supporting the environmental transition, social housing and broader purpose-aligned objectives. We are excited about the opportunities that lie ahead as we continue to deliver for all of our stakeholders.”
Last year, the group partnered with Crisis to tackle the shortage of available homes.
