Lloyds to slash 3000 jobs amid Brexit

The bank is dialling up its cost-cutting as it warns of a likely deceleration in Britain’s economy.

( Picture: AFP/ Niklas Hallen.

Lloyds Banking Group PLC is to cut 3,000 extra jobs as the British bank warned that Brexit will hit the UK economy in the months to come.

The UK’s biggest retail bank warned on Thursday that “a deceleration of growth seems likely” following Britain’s vote to leave the European Union. Faced with a combination of lower interest rates and muted economic growth the bank presented a plan to cut an extra £400 million ($US528.9m) of costs, by chopping thousands of jobs, closing some two hundred branches and selling off unwanted properties.

So far the bank has yet to see any real impact from Brexit among retail customers, Lloyds Chief Executive António Horta-Osório said. But “It is still early days,” he added. Among corporate customers, however, activity had been declining even before last month’s vote. Despite the looming slowdown, Lloyds doesn’t have any plan to ratchet back lending or cutting exposure to the UK’s commercial real-estate market, Mr Horta-Osorio said. The bank will continue to try to gain market share in credit card and auto finance.

Shares in the bank fell 3 per cent in morning trading as investors fretted about uncertainty over future dividend payments. The bank, which is 9 per cent owned by the British government, reported a rise in first-half revenue to £18.43bn, compared with £11.35bn a year ago. Net profit came in at £1.59bn, compared with a loss of £211m in the same period last year. The bank is increasing its interim dividend by 13 per cent to 0.85 pence a share.

“It is possible that this capital generation may be somewhat lower in future years than previously guided,” the bank said.

Mr Horta-Osorio said that he believed the Bank of England would likely cut interest rates by 0.25 percentage point at its next policy meeting. To offset the effects of rate cuts, Lloyds had already embarked on a cost saving drive to deliver £1bn of savings by 2017, this has now been increased.

Lloyds continues to deal with a range of regulatory issues. On Thursday it said the Financial Conduct Authority had launched a probe into how the bank handles mortgage arrears. The bank is the UK’s largest mortgage lender.

- Dow Jones newswires