Lloyds Banking Group has posted a better-than-expected third quarter profit as it reaps the benefits of a boom in demand for mortgages.
The bank reported a pre-tax profit of just over £1bn for the period between July and September – almost twice what was expected by analysts.
Britain’s biggest domestic lender received its biggest quarterly increase in mortgage applications since 2008, arranging new lending of £3.5bn.
The increase is mostly due to the busy housing market, as hundreds of thousands of people rush to take advantage of the stamp duty holiday on offer for some properties until the end of March.
Housing website Zoopla said earlier this week that 418,000 sales across the UK – worth a total of £112bn – are in the pipeline but are yet to be completed.
Like many banks, Lloyds has had its profits hurt by provisions for bad debts, due to the effects of the coronavirus and extremely low interest rates.
But Lloyds said it expected loan loss provisions for the year to be at the lower end of the £4.5bn to £5.5bn range it had given earlier.
Around 1.2 million retail payment holidays (£69bn of lending) have been granted by the bank to help borrowers affected by the pandemic.
Some 73,000 people are still on a payment freeze and 142,000 have requested further help.
Group Chief Executive António Horta-Osório said: “Although our performance has clearly been impacted by the pandemic and the associated challenging economic environment, I am pleased that we are now seeing an encouraging business recovery and, with impairments significantly lower, a return to profitability in the third quarter.”
He added: “The pandemic has accelerated many trends around ways of working and digital adoption and our long-run investment in digital propositions has positioned the group well to continue to support our customers.
“As a result, the number of digital users continued to increase, the proportion of products sold digitally is rising and customer satisfaction is at record levels. Our digital proposition and focus on technological change will remain a priority as we accelerate our transformation.”