MARKET REPORT: Lloyds dips after it takes £662m hit from bad loans

Shares in Lloyds fell after it revealed a fresh £662million charge for bad loans and missed the City’s profit forecasts.

As crisis engulfed arch-rival NatWest, the banking giant said more than 200,000 mortgage customers have taken a hit from rising interest rates.

As a result, its provision for bad loan losses reached £662million for the first half of 2023, a 76 per cent increase on the same period a year earlier.

Shares in Lloyds fell after it revealed a fresh £662million charge for bad loans

The group, which owns the mortgage lender Halifax, reported profits of £3.87billion for the first six months of 2023.

That was 23 per cent higher than a year earlier but slightly below the £4billion analysts had expected. Shares fell 1.7 per cent, or 0.76p, to 45.33p.

Banks have come under pressure to pass on higher interest rates to savers as well as borrowers. Lloyds said its net interest margin – the difference between what it charges borrowers and pays out to depositors – stood at 3.18 per cent for the first half of 2023.

That was up from 2.77 per cent during the same period a year ago. But analysts have warned further increases may be limited if interest rates are close to their peak.

The FTSE 100 fell 0.19pc, or 14.91 points, to 7676.89, while the FTSE 250 rose 0.19pc, or 36.66 points, to 19,186.54. 

Ocado shot to the top of the blue-chip leaderboard with a jump of 24.8pc, or 191p, to 960.4p – its highest level since April last year but still down 66pc from its 2020 peak.

The shares have nearly tripled since early last month, driven by takeover speculation and signs of a turnaround.

Consumer goods group Reckitt Benckiser cashed in on sales of Air Wick fragrances, Nurofen painkillers and Strepsils soothers, as its hygiene and health divisions helped sales rise 8.1pc to £7.45bn in the six months to the end of June – but the shares fell 1.1pc, or 64p, to 5878p.

The new boss of British American Tobacco cheered a bright start to his tenure as sales increased by 4.4pc to £13.4bn in the first half of 2023.

Tadeu Marroco, who has led the smoking giant for ten weeks, said it will look to focus on improving its performance in the US. It dipped 0.1pc, or 1.5p, to 2632.5p.

An unlikely buyer has emerged as the white knight that provided a lifeline for a London newspaper.

Matt Moulding’s nutrition and beauty empire THG bought City AM, which is on the verge of falling into administration, according to Sky News. THG rose 3.8pc, or 3.73p, to 102.75p.

Rio Tinto slid 3.1pc, or 165p, to 5229p leading a sell-off among miners after lower half-year profits following a slump in iron ore prices. It cut its dividend by 34pc.

The cost of living crisis has forced younger people who are ‘struggling financially’ to cut back on nights out, according to Revolution Bars. 

This was the main reason why the bar and pub chain said its sales in the year to July 2 were 8.9pc below the same period before the pandemic. Shares fell 0.9pc, or 0.05p, to 5.8p.

There was better news for Marston’s as warmer weather pulled in customers and pushed the pub operator’s sales in the 16 weeks to July 22 10.9pc ahead of the same period a year ago. Shares rose 1.3pc, or 0.4p, to 32.25p.

Former Homeserve finance boss David Bower has agreed to take up the same role at Robert Walters – down 7pc, or 31p, to 410p – on September 4, once Alan Bannatyne steps down.

Wandisco interim boss Stephen Kelly has landed the gig on a full-time basis. His appointment, which came a day after the software company’s shares returned to trading following a four-month suspension, was one of several board changes. Shares jumped 50.6pc, or 24.8p, to 73.8p.