Lloyds swings to loss after higher-than-expected Covid-19 hit

The boss of Lloyds has said that the impact of the coronavirus has been “profound” as the bank took a bigger-than-expected hit that pushed it into a loss.

Chief executive Antonio Horta-Osorio’s bankers revealed that the business had taken a £2.4 billion impairment charge in the second quarter for the loans it thinks might go bad.

It is almost £1 billion ahead of the £1.5 billion charge that analysts were expecting.

The news sent Lloyds into the red, with the bankers racking up a £602 million pre-tax loss for the first half of the year.

According to an average of the estimates by analysts who cover Lloyds, the bank was expected to lose £31 million before tax.

“The impact of the coronavirus pandemic in the first half of 2020 has been profound on the way we live our lives and on the global economy,” Mr Horta-Osorio said.

“We remain fully focused on helping our customers and the UK economy recover, in collaboration with Government and our regulators.”

The impairment adds to a £1.4 billion charge taken in the first quarter of the year, and bankers now expect the hit to reach between £4.5 billion and £5.5 billion in 2020.

Lloyds said that its outlook for the year remains “highly uncertain” and warned that “the impact of lower rates and economic fragility will continue for at least the rest of the year”.

Mr Horta-Osorio said: “I want to express my sincere gratitude to all my colleagues across the group for their dedication and persistence which have allowed us to deliver vital banking services to our customers effectively throughout the pandemic.

“Although the outlook is uncertain, the group’s financial strength and business model allow us to help Britain recover and play our part in returning our country to prosperity.

“Our customer-focused strategic plan remains fully aligned with the Group’s long-term strategic objectives, the position of our franchise and the interests of shareholders.”

Earlier this month, Mr Horta-Osorio said he will step down from the top job next year after a decade in charge.

The banker’s departure will mark a regime change at Lloyds as the board appointed Robin Budenberg as chairman.

He replaced Lord Blackwell, who had previously announced he was leaving in 2020.

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