Halifax the bright spot as Lloyds’ profits fall

Lloyds Banking Group said annual profits slumped by more than a quarter after it was hit by a £2.5bn bill for the payment protection insurance (PPI) scandal.

The Halifax Family Boost mortgage removes the need for a deposit, by using savings from parents or other family members

The lending giant reported pre-tax profits of £4.39bn for 2019, down 26 per cent on 2018.

One bright spot was the group’s Halifax Bank arm, which delivered “a solid financial performance”, according to Halifax managing director, Russell Galley.

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“Our commitment to being there for our customers when they need us is as strong as ever, we are focused on finding more ways to give them extra every day,” he said.

“The cost challenge facing first-time buyers has increased significantly over the last year, with growth in average purchase prices and deposits up sharply.”

Halifax said that the average first-time buyer is now paying £231,455 for their first home.

“With an average deposit of £46,187, our Halifax Family Boost mortgage (launched in September) has literally opened doors for families looking for a way to help the next generation on to the property ladder,” said Mr Galley.

“The Halifax Family Boost mortgage removes the need for a deposit, by using savings from parents or other family members that can be used as security for the mortgage.

“In the past year, we have helped around one in four first-time buyers get a mortgage as part of Lloyds Banking Group. Our ongoing commitment to this important part of the market was recognised at the What Mortgage Awards in 2019 where Halifax was voted Best Overall Lender and Best Mortgage Lender for first-time buyers.”

In a bid to help customers, Halifax has opened its first new site in London dedicated to home buying.

“Home by Halifax is thought to be the first of its kind in the UK and we are excited about learning from it to see what more we can do,” said Mr Galley.

On savings, he said the Halifax Savers Prize draw has been running since 2011 and has paid out more than £63m in prize money to over 120,000 winners.

“Now we have built on that success to create more life-changing moments for customers with our mortgage prize draw – where we pay off customers’ mortgage (up to £300,000) as the top prize,” said Mr Galley.

“We have already had six top winners and it’s amazing to be a part of these moments with our customers. We will kick off our monthly draws in May 2020.”

Halifax said it has been working hard to come up with new ways to help customers know where they are with their money.

“We have introduced a number of features including Save the Change (rounding up card transactions and putting the extra into a savings account), and our Mortgage Finder to help people looking to remortgage get the best options to fit their circumstances,” said Mr Galley.

“We were also the first UK bank to introduce a gambling card freeze feature on credit and debit cards with an accompanying ‘defrost’ period, helping customers to manage their money and gamble responsibly.”

Lloyds said that following its steep profits fall, the staff bonus pool was slashed by 33 per cent to £310m for 2019.

The annual report also revealed that chief executive Antonio Horta-Osorio’s pay was cut by 28 per cent to £4.7m for 2019 and outlined plans to reduce his maximum total payout - including pension payments - from this year as part of an executive remuneration overhaul.

The group said it did not set aside any further PPI charges in the fourth quarter, after a mammoth £1.8bn bill in the third quarter.