Profits at Lloyds fall after bank squeezed to increase rates for savings accounts customers
PROFITS at Lloyds have fallen by more than a quarter after the bank faced more pressure to increase rates for savings accounts customers.
Britain’s biggest domestic lender posted a 28 per cent drop in pre-tax profits to £1.6billion in the three months of the year, compared with £2.2billion a year ago.
The fall was largely expected by City analysts as the boost from higher interest rates is now fading.
Lloyds’ key net interest margin — the gap between the interest it charges borrowers and pays out to savers — slipped from 3.22 per cent to 2.95 per cent in the first quarter.
Lloyds, which owns Halifax, Bank of Scotland and the MBNA credit card brands, said the fall in the key profit measure reflected “keen pricing in the mortgage market and savers moving into higher-rate accounts”.
Russ Mould, analyst at investment platform AJ Bell, said: “Consumers may be pleased to see the margin that Lloyds makes on its loan book continue to contract.
“It suggests competition for deposits and loans alike, not to mention political and public pressure, is helping to boost returns for depositors and lower costs for borrowers.”
Banks have been improving their savings rates after coming under pressure to pass on the boost from 14-year high base rates to customers.
However, recent figures show that after a competitive quarter a number of lenders, including HSBC, NatWest, Santander and First Direct, have pulled cash offers aimed at enticing customers to open a current account.
Lenders’ profits swelled in the past year because they were slower to raise savings rates than to charge borrowers extra interest on their loans, overdrafts and credit cards.
William Chalmers, Lloyds’ finance chief, said its mortgage applications had picked up by 20 per cent in the first quarter, reflecting a return of stability.
The Bank of England has held interest rates and is expected to lower them later this year.
Lloyds now expects house prices to rise by 1.5 per cent this year rather than fall by 2.2 per cent, as it predicted in a previous forecast.
PZ’S BRONZE MEDDLE
BRIT healthcare and consumer goods giant PZ Cussons has put its self-tan brand St Tropez up for sale after admitting it has too many concerns on the go.
The Imperial Leather maker, which sells fridges in Nigeria and hand-wash in the UK, says its portfolio got too cluttered.
Bosses said it had had “unsolicited approaches” for St Tropez for which model Ashley Graham is a brand ambassador.
Analysts at Investec reckon it could fetch £100million.
The firm is also launching a review of its African operations after years of battling the challenges of wild currency devaluation and rampant inflation.
It began as a trading business in Sierra Leone before expanding to Nigeria and a deal would mark the end of its 140-year history on the continent.
Jonathan Myers, the FTSE 250 firm’s boss, said: “We’ve been trying to do too many things in too many places and spread too thinly.”
He said asset sales could fund further acquisitions.
Shares rose 5.5 per cent as investors welcomed plans to simplify the firm.
OFFICE RETURNS
BOSSES at 83 per cent of firms have ordered staff to return to the office — but only 38 per cent of workers go in every day, research shows.
Many businesses are using perks as a lure, 27 per cent providing free drinks, 18 per cent free lunches and 12 per cent offering free pizza as bait.
More than half, 51 per cent, offer flexible working.
The efforts seem to be working, with almost half of Brits working more frequently in the office, according to analysis of mobile data and polls by Virgin Media 02.
PRICE rises on package holidays may start to ease as Jet2 says its prices became “more competitive, particularly for April and May”.
Nearly half of its summer tickets are still to sell but bookings are up by 13 per cent compared with last year.
ALC-FREE FLYING
SALES of Heineken’s non-alcoholic lager are growing faster than the alcohol version as more drinkers switch, the brewer said yesterday.
The Dutch giant said the percentage increase was “in the high teens” compared with 12.9 per cent for the main brand.
The brewer said beer volume sales increased over the last three months, helped by sales of its “premium” Birra Moretti brand.
Bosses added that a jump in supermarket beer-buying was also pushing up its overall sales volumes.
SALES UP AT DUREX & DETTOL
DUREX and Dettol-maker Reckitt has said customers are willing to pay more for its condoms and cleaning items, leading to a boost in sales.
Boss Kris Licht reported a better-than-expected 1.5 per cent rise in like-for-like sales for the first three months of this year.
He said that after a year of its sales growth being driven by hiking prices, it was now selling more products too.
The consumer goods giant revealed that it has hiked prices by 7.5 per cent in Europe and Australia, more than anywhere else in the world.
The price hikes led to a 2.1 per cent drop in sales volumes but it was still selling more of its Durex, Dettol, Finish and Gaviscon ranges.
Last month Reckitt was hit with a $60million US legal claim following the death of a premature baby who had been fed its Enfamil baby formula.
Reckitt said it would still sell the formula and would appeal against the court decision.
Shares fell by 15 per cent after the US litigation was reported but rose by 3.5 per cent yesterday to £44.00 after the uptick in trading.
SET FOR TACO-OFF
RESTAURANT chain Tortilla is plotting its European roll-out amid a surging appetite for Mexican food.
It saw a 14 per cent rise in sales to £65.7million for last year, with a £1million loss.
Tortilla, with 87 sites, wants to open another eight in the UK in 2024 and roll-out to Europe.
Last week new boss Andy Naylor ran 28 miles, stopping at 21 of its London stores, as an alternative to the marathon.
He told The Sun he celebrated with a double chicken burrito.