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Lloyds Bank sets aside £450m for car loan investigation

Lloyds CEO Charlie Nunn (Lloyds Bank)
Lloyds CEO Charlie Nunn (Lloyds Bank)

LLOYDS BANK offered a positive view of the UK economy thismorning, with booming profits and low impairment charges on bad debts.

It made profits for the year of £7.8 billion a rise of 11%.Charges for debts not being repaid by customers fell sharply to £308 millionand the dividend on a widely held share is up 15% to 2.76p.

Chief executive Charlie Nunn said: " With continued cost of living pressures weknow that 2023 was challenging for many. We were proactive in providing support.By using data and insights to gain a deeper understanding of customer needs, wecontacted 7.5 million customers and around 600,000 businesses to help withtheir financial resilience.”

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In October Lloyds Bank said the UK economy was improving andshould avoid falling into recession. The UK economy did in fact just fall intoa recession, though it is expected to be short.

The annual report shows that Nunn was paid £3.7 million last year, including a bonus of £1.3 million. His finance chief William Chalmers got £3.1 million.

Both pay figures are down slightly on last time.

Lloyds has set aside £450 million to deal with potential finesfrom the City regulator from its investigation into car loan commissions.

That suggests the bill across the whole banking sector could run into many billions of pounds.

The bank said: “There remains significant uncertainty as to theextent of any misconduct and customer loss, if any, the nature of anyremediation action, if required, and its timing. Hence the impact couldmaterially differ from the provision, both higher or lower.”

Lloyds is seen as a proxy for the UK economy so the results willbe closely examined for signs of distress.

Customer deposits fell by £3.9 billion to £471.4 billion.

Lloyds now expects there to be three cuts in interest rates from the Bank of England this year with house prices to stay steady – perhaps fallingjust 0.2% this year.

The UK economy will be “resilient but low growth” though somecustomers do face markedly higher mortgage payments.

The bank has paid down its staff pension scheme deficit. It was once £7.3 billion and is now zero.