- Bad debts accumulate as interest rates bite
- Lending and deposits both lower
On the face of it, half-year results for Lloyds Banking Group (LLOY) showed the benefit of widening interest rate margins, with the 'black horse' closing in on half-year profits of £3.9bn, substantially up on the £3.1bn it generated at this point last year, thanks to the Bank of England’s interest rate raising campaign. However, the market’s reaction was decidedly muted after the results showed another large charge for bad loans of £419mn in the second quarter, compared with £243mn in the first and £465mn in the final months of 2022. Management also warned that the outlook remains “uncertain”. The net result was that Lloyds' performance came in slightly below the City’s forecasts, with the downbeat mood overshadowing management raising its margin guidance forecast for the year.