Lloyds axes 150 branches, 9,000 jobs
By Emma Dunkley
Lloyds Banking Group has confirmed plans to to close 150 branches and cull 9,000 jobs in a move to cut costs and focus on digital services.
The lender, which has a 2,253-strong network, said it will make a 6 per cent reduction over the next three years by closing branches in urban areas where there is overlap. Although 200 branches in total will be shut, around 50 will be opened, with a view to increasing the number of Halifax branches in Scotland.
The closures were announced as the bank revealed its next three-year strategy, which is centred on investing £1bn in digital products and services. Lloyds also said it had set aside a further £900m for payment protection insurance.
Antonio Horta-Osorio, chief executive of the bank, said the last three year strategy to simplify and stabilise the bank has helped return Lloyds to profitability.
"But we cannot stand still," he said. "This is a highly competitive market and customer behaviour is changing."
Customers want a "multi-channel" bank, using mobile and online services alongside branches, leading the bank to "invest heavily" in digital channels over the next three years.
George Culmer, financial director of the bank, said branches will "still play a significant role" and that Lloyds will actually grow its market share as other banks make larger reductions to their network.
The 9,000 job cuts are "regretful", he said, but reflect the increased automation of the business, spanning distribution to support functions at the bank. Some staff will be redeployed in other roles, he added.
As part of its new strategy, the bank plans on boosting lending with an additional £30bn to core customers over the next three years.
The lender, 25 per cent owned by the government, will target a further £1bn of cost savings by the end of 2017 and a cost to income ratio of around 45 per cent over this time period.
In its third-quarter results, the bank posted pre-tax statutory profit of £751m, reversing a loss of £440m from the same period last year.
Underlying profits leapt 35 per cent to reach £6bn year-to-date, while underlying profits for the third quarter hit £2.2bn - up 41 per cent from the previous year.
But the lender had to set aside a further £900m during the quarter for payment protection insurance, adding to the £10.425bn Lloyds had allocated up to June.
Mr Culmer said it was "disappointing" that the bank has to make further provisions, noting an uptick of complaints compared to the second quarter, although points out complaints are down 18 per cent on the same period last year.
In terms of repaying a dividend, the bank said it was in ongoing discussions with the regulators. Although Lloyds was among the worst banks in the European Banking Authority's stress test results unveiled at the weekend, it said it has substantially bolstered its capital position.
Its core tier one - a key measure of financial strength - increased to 12 per cent, up from 10.3 per cent at the end of 2013, while the bank's leverage ratio stands at 4.7 per cent.
The bank has also seen a 59 per cent drop in impairment charges year-to-date and noted its cost to income ratio had fallen to 49.7 per cent.
(c) 2014 The Financial Times Limited