Lloyds and Barclays profits drop as mortgage competition surges

Lloyd’s pre-tax profits were just £1.6 billion between January and March, down from £2.3 billion for the same period last year.

The bank attributed this to issues "mainly within UK mortgages" with growing competition between lenders as uncertainty remains over interest rates and the fortunates of the housing market. 

The group, which owns Halifax and Bank of Scotland, says in the three months to the end of March its net interest income fell 10% to £3.2 billion, partly because of competition stepping up between mortgage lenders.

Chief executive Charlie Nunn says: "The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality. Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance."

Lloyds also updated its forecasts for the year ahead amid the UK's improving economic outlook.

It estimates that house prices across the UK will rise by 1.5% this year after previously forecasting a drop. 

Lloyds announced in January it planned to cut some 1,600 jobs as it shifts its business towards online banking.

Meanwhile Barclays has revealed a 7% drop in income for the three months to the end of March.

It said loans and advances to customers decreased by 1% compared to the same period a year earlier, 

largely driven by subdued mortgage lending amid lower market demand. 

The difficulties in the UK mortgage market helped contribute to pre-tax profits across the banking group falling by 12% to almost £2.3 billion.