Halifax plays its part in Lloyds bounce back as economy improves on the back of vaccine rollout

Lloyds Banking Group has seen first quarter profits surge to £1.9bn after it cut reserves for bad debts thanks to a better economic outlook.

Lloyds is upgrading its outlook for the full year

The group, which includes Halifax and Lloyds Banks, announced results for the first three months of 2021 that beat expectations and were a big leap from the £74m first quarter profits a year earlier.

On an underlying basis, Lloyds saw profits jump to £2.1bn.

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Halifax Bank played its part in the group's resurgence, keeping 98 per cent of its branches open and making 750,000 wellbeing calls to customers during the pandemic. Halifax lent nearly £4bn to first time buyers in the first quarter, with total mortgage completions for March the highest they have been since 2008.

Russell Galley, managing director at Halifax Community Bank, said: "During a challenging start to the year for many, I remain deeply thankful to our colleagues who have worked tirelessly to support customers, with the ongoing impacts of the pandemic.

"This has been achieved whilst the vast majority of our colleagues have been working from home, perhaps best demonstrated by the almost 15,000 remote mortgages we’ve helped our customers to complete, over the first quarter of the year."

Halifax is offering 95 per cent mortgages through the mortgage guarantee scheme to both first time buyers and home movers and has committed to lending £10bn in 2021 to help people buy their first home, so it can make home ownership a reality for even more people.

Mr Galley said: "This is critical to the longer term financial health of young people, as our research shows that first-time buyers now save more than £800 a year, as the gap between buying and renting has stretched."

In the wider housing market, the latest Halifax House Price Index showed a resurgence during March, with the average property worth £254,606, a new record high. Halifax said the continuation of Government support measures has been key in boosting confidence in the housing market and the extended stamp duty holiday put "another spring in the step" of home movers.

Mr Galley said: "Our Savers Prize Draw, which launched in 2011, has paid out a fantastic £65m through 140,000 prizes. Our newer Mortgage Prize Draw – launched in 2019 – has given over £2m to customers. Our recent winner Jude has had a tough year, and we were thrilled to tell him we were paying off his mortgage following his Prize Draw win, which we were touched to hear was going to be life-changing.”

Lloyds revealed a net impairment credit of £323m, having released £459m of previous impairments for loan losses thanks to greater optimism over the UK’s economic recovery from the pandemic.

Lloyds is upgrading its outlook for the full year on a range of measures, including its net interest margin – a key performance measure for retail lenders.

Outgoing Lloyds' chief executive Antonio Horta-Osorio, who leaves later this month to join Credit Suisse, said: “Whilst we are seeing positive signs, notably the progress of the vaccine rollout and the emergence from lockdown restrictions, the outlook remains uncertain.

“The group remains absolutely focused on supporting its customers and helping Britain recover from the financial effects of the pandemic.

"The long-run transformation of the group has positioned the business well to address the challenges of the pandemic.

“We have made a strong start to the year with the quarterly results and on delivering strategic review 2021.”