Lloyds warning as profit falls 21 per cent

Taxpayer-backed Lloyds Banking Group revealed a dip in third- quarter profits today and warned it is in danger of missing its medium-term targets.

Lloyds, which is 41 per cent owned by the Government, said underlying profits fell 21 per cent to £644m in the three months to September 30, after being hit by weaker demand for loans and higher wholesale funding costs.

The weak third-quarter performance meant the group made bottom-line losses of £3.9bn in the nine months to September 30 after taking a £3.2bn hit to cover its mis-selling of Payment Protection Insurance.

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Lloyds, which recently revealed that chief executive Antonio Horta-Osorio is on sick leave, said the weak state of the economy could mean its medium-term recovery targets are pushed back to “beyond 2014”.