Lloyds Banking Group’s profits up by 23% as banks fail to pass on higher rates to savers
LASTEST profit margins at Lloyds Banking Group highlight how banks are hitting borrowers while failing to pass on higher rates to savers.
The FTSE 100 bank said pre-tax profits had surged by 23 per cent in the six months to the end of June.
After a decade of low interest rates, Lloyds admitted it is now making more money from borrowers and boosted its net profit margin forecast to more than 3.1 per cent.
It said its profit margin was 3.18 per cent, compared to 2.77 per cent last year.
The net interest margin is closely watched by investors as it tells the difference between what banks charge borrowers versus the amount paid out to saver deposits.
Lloyds and its rivals already stand accused by the Treasury Select Committee of giving “measly” rates to savers — with instant access accounts less than half the bank rate of five per cent.
The bank also struck a note of caution that higher rates could lead to a jump in customer default costs and mortgage arrears.
As a result it has hiked the amount it has set aside for bad loan provisions from £381million to £662 million.
Boss Charlie Nunn said that currently the bank had seen “very, very low arrears” for its mortgage customers. He urged people in financial difficulty to speak to the bank about help.
Addressing the NatWest scandal over the debanking of Nigel Farage, he said: “With respect to Lloyds, we are clear we don’t include looking at people’s personal or political beliefs.”
Meanwhile rival bank Santander UK reported an 18 per cent rise in pre-tax profits to £1.2billion from £993million. Its net interest income also shot up 10 per cent.
AMAZON'S DATA VOW TO RIVALS
AMAZON has agreed to change how it handles marketplace sellers’ data after a watchdog’s probe.
#The Competition and Markets Authority had raised concerns over the technology giant using information on what products were popular and their retail price to prioritise its own products in its promotions.
Ann Pope, Senior Director for Enforcement at the CMA, said: “Amazon’s commitments to the CMA will help ensure that third-party sellers on Amazon Marketplace can compete on a level-playing field.
“That will ultimately, mean customers in the UK get a better deal.”
TAKING THE SHEIN OFF
H&M, the world’s second biggest fashion company, is suing Chinese fast-fashion rival Shein for allegedly copying its outfits.
The lawsuit has been filed in Hong Kong, with H&M confirming: “We believe Shein in multiple cases has infringed on our designs.”
Shein, which has previously enlisted reality TV star Khloe Kardashian, as an ambassador, has grown rapidly over the past five years.
It targets young shoppers with its cheap clothes and rapid copies of catwalk and celebrity designs.
It has also beaten Asos and Boohoo at their own fast-fashion game, churning out 6,000 items a day in Chinese factories — six times more than Asos.
Last year, it was the most downloaded app on the Apple Store by US consumers.
Shein reckons its revenues could double to £45billion by 2025. But it is often criticised for copying designs.
CIGS' VAPE PIVOT
BRITISH American Tobacco is close to breaking even on its vaping business after attracting 1.5million new customers to its Vuse brand.
BAT is aiming to make £5billion from non-cigarettes in the next two years.
It says it has made £1.65billion from selling vape products to 24million customers in the last six months, up 29 per cent on last year. The company’s traditional tobacco business makes £13billion.
Boss Tadeu Marroco thinks the vape business will start making money in 2024.
CITY AM’S BOUGHT UP BY THG
MATT Moulding’s ecommerce group THG has added a financial newspaper to its portfolio of protein powder, cosmetics, country houses and technology.
THG confirmed that it had bought London-based City AM in a pre-pack deal that saves it from administration.
The surprise move comes days after THG signalled it was shedding non-core businesses movie merchandiser Zavvi and bicycle firm Probikekit.
Mr Moulding has previously attacked financial journalists over unfair treatment and accused the media of conspiring with hedge funds to send THG’s share price lower.
Mr Moulding said in an Instagram post: “There will be one rule for the future editorial direction of City AM. Where possible be a cheerleader for the UK and businesses alike, and don’t get dragged over to the dark side.’”
GIVE HELP WITH GAS
ENERGY suppliers have been told they must do more to help households and businesses.
Under new Ofgem rules, suppliers will have to offer support to customers if their electricity or gas is cut off.
Small businesses have complained of expensive contracts, even when the cost of oil and gas has fallen.
Ofgem has agreed suppliers should allow small firms to “blend and extend” their contracts to make bills more affordable.
DUREX PRICE RISE
THE maker of Durex, Cillit Bang and Nurofen has landed consumers with a 10.4 per cent price hike.
Reckitt Benckiser said consumers had rejected its pricey products in the cost of living crisis, sending sales volumes down 4.4 per cent.
Revenues still grew 1.9 per cent to £3.5billion in the last six months while operating margins rose to £1.76billion.
The consumer goods giant’s profit margins are 23.6 per cent. In contrast supermarkets’ profit margins are about 3 per cent.