Lloyds Banking Group has posted a 20 per cent drop in annual pre-tax profits for 2024, missing City forecasts amid rising costs and one-off charges linked to the ongoing motor finance commission scandal.
The FTSE 100 lender recorded profits of £5.97 billion last year, down from £7.5 billion in 2023 and below analyst expectations of £6.4 billion.
Lloyds’ income was dented by a lower net interest margin — essentially the difference between interest income from lending and the costs of funding — in an environment of falling rates. The bank has also taken heavier remediation and impairment charges, including an additional £700 million linked to disputes around undisclosed or “partially disclosed” commissions in car loans.
This latest set-aside brings the lender’s total provision for possible motor finance compensation to £1.15 billion, though Lloyds cautioned there remains “significant uncertainty” over the final outcome. The charge is connected to a Court of Appeal judgment involving three consumers — Wrench, Johnson and Hopcraft — who challenged the liability of lenders when credit brokers such as car dealers arrange a hire-purchase agreement but fail to fully disclose commission details.
Charlie Nunn, chief executive of Lloyds, noted that the £700 million provision was prompted by the appeal court ruling, which goes “beyond the scope of the original FCA motor finance commissions review”.
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