LONDON: Britain's Lloyds Banking Group yesterday reported a slump in 2020 profit due to "significant" economic fallout from the coronavirus pandemic. Profit after tax nosedived 65 percent to £865 million ($1.2 billion, 1.0 billion euros) last year, from £2.46 billion in 2019, LBG said in a results statement. The bank took a huge £4.2 billion impairment charge which reflected a "significant deterioration in the economic outlook" as a result of the COVID-19 health emergency.
Pre-tax profit tumbled 72 percent to £1.2 billion, while income tanked by around one third to £29.2 billion. "The group's financial performance in the year has been impacted by the pandemic," said outgoing chief executive Antonio Horta-Osorio, who leaves later this year after a decade in charge. "The impact of the coronavirus pandemic on the people, businesses and communities in the UK and around the world in 2020 has been profound.
"We remain absolutely focused on working together with all of our stakeholders to support our customers and ensure a sustainable recovery," he said. Under Horta-Osorio's stewardship, the bank slashed thousands of jobs and branches in a vast cost-cutting drive following the global financial crisis, refocusing on retail and business banking that helped it return to profit. After a UK state bailout in 2008, LBG returned to full private ownership in 2017.
The group confirmed Wednesday that Briton Charlie Nunn would replace Portuguese national Horta-Osorio as chief executive on August 16. Nunn's appointment, already announced, comes as Horta-Osorio is due to become chairman of Swiss lender Credit Suisse later this year. Alongside the results, Horta-Osario said "significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination program in the UK and around the world". The bank added that it will bring back its shareholder dividend, which was suspended at the start of the COVID-19 crisis.
The group will pay 0.57 pence per share, which is the maximum permitted under UK regulatory guidelines. Britain's biggest banks agreed to suspend shareholder dividends until the end of 2020, to preserve cash during the pandemic after the country's financial regulator urged prudence. In early London trade yesterday, Lloyds' share price added 1.2 percent to 39.67 pence. The financial services giant, whose brands include Lloyds, Halifax, Bank of Scotland and MBNA, operates mostly in Britain.
Virus-hit earnings season
Its results wrap up the annual earnings season from the UK's four main banks. Asia-focused HSBC on Tuesday reported a 30-percent slump in net profit to $6.1 billion, which it blamed primarily on higher-than-expected credit losses and other bad debt charges. NatWest bank, which last year changed its name from Royal Bank of Scotland but remains majority-owned by the UK government after a massive bailout, plunged into a net loss of £753 million for 2020.
NatWest also said it would shut its Ulster Bank operations in Ireland, impacting around 3,000 staff. Barclays announced a 38-percent slump in annual net profit to £1.53 billion and said expenses related to the coronavirus pandemic were set to stay high this year. - AFP