Markets News

Pandemic pushes Lloyds Bank into the red as bad debt fears rise

LONDON, July 30 (Reuters) - Lloyds Banking Group swung to a rare pretax loss in the first half of 2020, after setting aside a bigger than expected 2.4 billion pounds ($3.1 billion) second quarter provision to cover a potential hike in bad loans due to the coronavirus.

The quarterly provision for loan losses compared to a 1.5 billion pound forecast, according to an average of analyst estimates compiled by Britain’s biggest domestic bank.

The fresh charge pushed Lloyds’ provisions for the first half to 3.8 billion pounds.

Lloyds is searching for a new CEO to help steer it through the economic fallout from the pandemic, after António Horta-Osório said earlier this month he would step down by next year after a decade leading the bank.

The first half loss compared with pretax profits of 2.9 billion pounds last year. The bank posted a statutory post-tax profit of 19 million pounds, largely due to tax credits earned on some of its most valuable assets.

Lloyds’ net interest margin - a key measure of lending profitability - sunk by 20 basis points to 2.59% in the three months to end-June, as interest rates hover just above zero and demand for loans and mortgages wilts.

$1 = 0.7714 pounds Reporting by Iain Withers and Sinead Cruise, editing by Lawrence White