UK bank Lloyds says Q1 profit dives 60pc on COVID-19

LONDON (AFP) – Britain’s Lloyds Banking Group (LBG) yesterday announced that first-quarter net profit tumbled 60 per cent, after taking a GBP1.43 billion hit from the COVID-19 pandemic and restructuring costs.

Earnings after taxation fell to GBP480 million in the reporting period from GBP1.2 billion a year earlier, LBG said in a statement.

“The coronavirus pandemic presents an unprecedented social and economic challenge which is having a significant impact on people and businesses in the United Kingdom (UK) and around the world,” stated Chief Executive Antonio Horta-Osorio.

“The economic outlook is clearly challenging with the longer-term outcome dependent on the severity and length of the pandemic and the mitigating impact of government and other measures in the UK and across the world.”

At the same time, the lender said it would not give an outlook owing to chronic uncertainty arising from COVID-19, which is widely expected to lead to a global economic downturn.

The pandemic has sparked emergency action from the Bank of England and other major central banks, which have together injected enormous amounts of liquidity – and also prompted vast government stimulus measures.

The Bank of England (BoE) last month slashed interest rates to a record-low 0.1 per cent and expanded its quantitative easing – under which it buys UK government and corporate bonds – to GBP645 billion. “Given the significant change in the operating environment and economic expectations the group’s previous guidance is no longer appropriate,” LBG added.

“The impact of lower rates, lower levels of activity and higher impairment on the group’s business will continue into the second quarter, but remains difficult to quantify given the significant uncertainty. The group will update the market once there is greater clarity.”

A BoE policymaker had warned last week that the deadly novel coronavirus now threatens Britain’s economy with potentially the worst recession in several centuries.

The warning came as survey data showed UK business activity shrivelled up this month on the back of COVID-19 lockdowns at home and abroad.

“Throughout this period of uncertainty, we will continue to work closely with government, regulators and other authorities and use the strength of our balance sheet and business model to ensure that we play our part in supporting our customers and the UK economy,” Horta-Osario said.