London Daily

Focus on the big picture.
Monday, Dec 22, 2025

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
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
Former UK Prime Minister Boris Johnson proclaims, “For Ukraine, surrendering their land would be a nightmare.”
Microsoft Challenges £2.1 Billion UK Cloud Licensing Lawsuit at Competition Tribunal
Fake Doctor in Uttar Pradesh Accused of Killing Woman After Performing YouTube-Based Surgery
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
UK Officials Push Back at Trump Saying European Leaders ‘Talk Too Much’ About Ukraine
UK Warns of Escalating Cyber Assault Linked to Putin’s State-Backed Operations
UK Consumer Spending Falters in November as Households Hold Back Ahead of Budget
UK Orders Fresh Review of Prince Harry’s Security Status After Formal Request
U.S. Authorises Nvidia to Sell H200 AI Chips to China Under Security Controls
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
"App recommendation" or disguised advertisement? ChatGPT Premium users are furious
×