Lloyds profits surge by 57% but bank sets aside £450m for car finance probe

22 February 2024 , 09:08

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Lloyds has set aside £450m for car loan fines and payouts (Image: PA Archive/PA Images)

Lloyds Banking Group has reported a significant increase in yearly profits of over 50%, up to £450m, as a result of higher borrowing costs, but set aside £450 million in anticipation of potential costs from an investigation into its past car finance selling methods.

The bank stated that it had made a pre-tax profit of £7.5 billion in the year 2023, showing a 57% increase compared to the £4.8 billion made in 2022. This exceeds what analysts had expected.

This profit was due to a 5% increase in its underlying net interest income - which is the difference between the money it received from loans and what it paid out for deposits - jumping to £13.8 billion. However, Lloyds said it has earmarked a remediation charge of £450 million.

This money will be used to cover possible costs arising from the investigations led by the financial regulator into the banks past car finance selling methods. Last month the The Financial Conduct Authority (FCA) began an investigation into whether people may be owed compensation because they were charged too much for their car loans.

Charlie Nunn, chief executive at Lloyds, said: "In 2023 the group remained focused on proactively supporting people and businesses through persistent cost-of-living pressures, whilst financing their ambitions and growth. This has come alongside strong progress on our strategy and delivering increased shareholder returns, guided as always by our core purpose of Helping Britain Prosper."

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