London Daily

Focus on the big picture.
Wednesday, Jun 17, 2026

Britain's biggest lender takes bad loan charge ahead of 'mortgage shock'

Britain's biggest lender takes bad loan charge ahead of 'mortgage shock'

Higher interest rates provide a boost to the group's bottom line but it fears they could also push more customers towards default, resulting in a fresh provision on its balance sheet.

The boss of Lloyds Banking Group has told Sky News a "mortgage shock" is awaiting around 200,000 of its home loan customers.

In an interview with Ian King Live, Charlie Nunn said 10% of its mortgage customers were due to exit a fixed rate deal this year and it was actively speaking to many households about affordability given hikes to rates over the past year.

"Where we're really focused on as a bank is looking at those customers that are going to have an increase in their mortgage payments which is going to increase their interest they pay as a percentage of their income", he said.

"There's less than 1% of our customers that we think are going to have a mortgage interest shock like that and what we've been doing is quietly reaching out to them."

He was speaking hours after the group revealed a provision of £1.5bn last year - £500m of it in the final quarter - for bad loans ahead.

The group fears defaults could rise as a result of higher interest rates - mostly a consequence of Bank of England efforts to combat inflation - combining with the wider cost of living crisis to squeeze budgets further.

Lloyds reported a 12% increase in its bonus pool for 2022 despite pre-tax profits remaining flat on the previous year.

Earnings of £6.9bn for the 12 months matched the sum achieved in 2021, even though revenue had risen 14% to £18bn.

The 12% rise in the bonus pool to £446m, revealed separately in the bank's annual report, is above the peak rate of inflation seen over the year.

Charlie Nunn is the chief executive of Lloyds Banking Group

Mr Nunn took £1.33m of that sum, the document said, plus a long-term share plan award of 150% of his salary.

It took his total awards to £3.8m.

The bank, which incorporates Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows, also announced it would pay a 1.6p per share final dividend and a share buyback of up to £2bn.

It amounts to £3.6bn of shareholder returns.

The group said rising interest rates and additions to its loan book helped profits almost double over the final three months of 2022.

The latter rose by £6.3bn to £475bn over the year.

Mr Nunn told investors: "While the operating environment has changed significantly over the last year, the group has delivered a robust financial performance with strong income growth, continued franchise strength and strong capital generation, enabling increased capital returns for shareholders.

"We know that the current environment continues to be challenging for many people and have mobilised the organisation to further support our customers.

"Our purpose-driven strategy is more relevant now than ever before. We remain committed to helping Britain prosper and helping the country recover from the current economic uncertainties."

Shares fell back by 2% at the market opening.

John Moore, senior investment manager at RBC Brewin Dolphin, said: "Lloyds has finished off the major UK banks' results season with a performance that is 80% NatWest and 20% Barclays.

"Profits have been flat year-on-year, with bad loan provisions adding extra costs, among other moving parts.

"The bank has a history of prioritising its dividend, which is up 20% on last year, and acts as a good indicator of sentiment from management.

"Alongside the dividend increase is a £2bn share buyback programme, underpinned by enhanced guidance for the years ahead - all of which suggests a relatively positive outlook for Lloyds."

Newsletter

Related Articles

0:00
0:00
Close
Government Advances New Airport Slot Rules to Ease Airline Operating Constraints
BBC Opens Flagship Science-Fiction Franchise to Competitive Production Bids
Chancellor Meets City Leaders Amid Concerns Over Gilt Market Liquidity
Rathbones Shares Fall Seventeen Percent After Regulatory Review Reveals Compliance Failings
United Kingdom Joins Group of Seven Initiative Using Artificial Intelligence and Quantum Computing for Cancer Research
Parliament Debates Doubling Tax Allowance for Pensioners After Major Public Petition
Measles Cases Exceed Seven Hundred in London and the West Midlands
British Military Leadership Faces Parliamentary Scrutiny After Defence Secretary's Sudden Resignation
House of Lords Begins Debate on Steel Industry Nationalisation Legislation
Parliament Advances Bill to Abolish NHS England and Create Single Patient Records
Parliament Fast-Tracks National Security Bill to Expand Powers Against Foreign Threats
United Kingdom and European Union Set July Summit to Deepen Post-Brexit Cooperation
United Kingdom Imposes Seventy New Sanctions on Russia and Expands Support for Ukraine's Nuclear Sector
United Kingdom Announces Social Media Ban for Children Under Sixteen
0British Government Investigates Reports of Russian Warship Firing Warning Shots Near Isle of Wight
UK Supreme Court Revises Legal Definition of Deprivation of Liberty
King’s Birthday Honours Recognise Contributions Across Science, Culture and Public Service
UK Ministry of Defence Reports Interdiction of Russian Shadow Fleet Vessel
UK and US Launch Joint Regulatory Programme for Medicines and Healthcare Products
Solicitor General Refers Murder Sentence to Court of Appeal Under Unduly Lenient Scheme
UK Launches £1.6 Million Mobile Museum Initiative to Expand Cultural Access
Judicial Pay Structure Undergoes Government Review Following Senior Recommendations
Government Confirms Nearly 180 New Youth Hubs Across the United Kingdom
UK Government Expands Careers Support Through Partnership with LinkedIn
Digital News Report Highlights Growing Global Concern Over AI and Information Overload
UK Chancellor Reaffirms Fiscal Discipline and Borrowing Reduction Strategy
UK Government Invests £219 Million in Sustainable Aviation Fuel Development
Rolls-Royce Small Modular Reactors Secures Major Swedish Export Contract
Government Confirms Locations for Nearly 180 Youth Hubs Across Great Britain
UK Government Partners with LinkedIn to Expand Employment Support Services
Reuters Institute Report Flags Rising Public Anxiety Over News and Information Overload
UK Government Commits £219 Million to Expand Sustainable Aviation Fuel Industry
Chancellor Convenes Market Engagement Group to Assess UK Economic Outlook and Productivity Risks
Rolls-Royce Wins Multibillion-Pound Swedish Contract for Small Modular Nuclear Reactors
Government to Ban Social Media Access for Under-Sixteens Across the United Kingdom
Government Approves Fast-Tracked Broadcast Merger Reshaping UK's Media Landscape
Resignation of Defence Secretary John Healey Triggers Debate Over UK Military Strategy
Britain Intensifies Diplomatic Efforts to Support US-Iran Ceasefire
Bank of England Faces Tough Interest Rate Choices After Economic Contraction
Belfast Sees Second Day of Anti-Migrant Riots as Police Deploy Water Cannons
UK Economy Shrinks in April as Energy Price Shocks Weigh on Growth
UK to Ban Social Media Access for Children Under 16 From 2027
UK Parliament Opens Week of Fast-Tracked Security and Infrastructure Legislation
Northern Ireland Projects £21 Million Boost From Major Cultural and Sporting Events
UK and Japan Sign Technology Security Pact to Strengthen AI and Supply Chain Cooperation
UK Welcomes US-Iran Peace Breakthrough Aimed at Restoring Strait of Hormuz Shipping
British Forces Intercept Russian Shadow Fleet Oil Tanker in English Channel Sanctions Operation
UK to Ban Social Media for Under-16s Under Landmark Online Safety Expansion
Anti-Immigrant Riots Spread Across Belfast, Raising Security Concerns
Ministry of Defence Opens Europe's Largest Drone Testing Facility in Swindon
×