Lloyds profits fall as firm takes precautions on hit from tariffs

It set aside £309m for impairment charges, up from £57m a year ago, including £100m for potential borrower defaults as the tariff hikes unveiled by US President Donald Trump have led to worries over the worldwide economic outlook.

The group said: “Initial non-UK tariffs announced in the first few days of April and the immediate market response were larger than expected.”

But on its forecast for the UK outlook, it said it is predicting a “slow expansion in gross domestic product and a modest rise in the unemployment rate alongside small gains in residential and commercial property prices”.

“Inflationary pressures remain persistent, but gradual cuts in UK Bank Rate are expected to continue during 2025,” it added.

The group stuck by its guidance for full-year results in the face of “recent market volatility and economic uncertainty”.

Charlie Nunn, group chief executive of Lloyds, said: “In the first quarter of 2025, the group delivered sustained strength in financial performance.

“Underpinned by our financial performance, strategic execution and franchise strength, we remain confident in the outlook for Lloyds Banking Group and in our 2025 and 2026 guidance.”

Chief financial officer, William Chalmers, said the bank had limited exposure to the US and tariff impacts, but that it does provide some lending to exporters to the US, albeit less than one per cent of its lending balance sheet.

He added there “may be some dampening on corporate activity going forwards” from the trade war.

Concerns over a global slowdown have also seen rate cut expectations increase.

The group’s first-quarter results showed a lending boom as borrowers sought to complete on house purchases ahead of the stamp duty change from the beginning of April.

Mortgage lending grew by £4.8bn as it saw 19,000 completions in the first three months of the year, with customers racing to beat the stamp duty deadline.

It said March 27 was its biggest ever single day for completions, with nearly 5,000 on that day alone.

The group did not book any further provisions for the motor finance scandal.

Lloyds has previously said that it put by more than £1bn to cover the costs of potential mis-selling of car loans with hidden commission payments.

The industry is now waiting for a Supreme Court decision on the case.