UNDERLYING profits at Lloyds leapt 32 per cent in the first half of 2014, boosted by strong trading at Halifax.
Over 100,000 people switched their bank account to Halifax in the six months to June 30, lured by the offer of £100 to move bank accounts, the payment of £5 a month and tie-ups with popular retailers and restaurant chains such as Morrisons, Waitrose and Pizza Express.
Halifax’s managing director David Nicholson said: “Our customers got £2.5m worth of discounts back. We are definitely giving customers extra.
“It’s food and clothing that is doing particularly well. We’re growing the number of our partners.”
Halifax’s strong performance was a bright spot for parent company Lloyds, which announced a further £1.1bn hit from “legacy issues” in the year to date.
The bill included an extra £600m to cover mis-sold payment protection insurance (PPI) and £226m on rate-rigging, which included its manipulation of the Bank of England life-support scheme.
Excluding the one-off charges, Lloyds said its underlying performance continued to improve as it reported a 32 per cent jump in profits to £3.8bn for the six months to June 30.
The bank benefited from improving economic conditions, with losses from bad debts more than halving to £758m. The overall bottom-line profit of £863m, which includes the £1.1bn hit from legacy issues, was down from £2.1bn a year earlier.
Lloyds expects profit for the full year to be significantly higher than in the first half as the scale of charges for misconduct declines as the year progresses.
At Halifax, Mr Nicholson said the bank has seen significant growth in mortgage lending.
The mortgage book rose 2.7 per cent to £136bn and in the first half the bank advanced £5.7bn to 44,000 first-time buyers. “We’re seeing significant shifts in the market,” said Mr Nicholson.
“We’re definitely growing market share. Our market share for first-time buyers stands at 23 per cent.”
Around 6,000 of the new mortgages came through the Government’s Help To Buy scheme.
Halifax’s eight-week run of offering to pay customers’ stamp duty proved very popular with first-time buyers.
Halifax’s Savers Prize Draw, which enters customers into a monthly prize draw as well as paying interest, has now signed up 2.2 million customers.
“We’ve got another two million customers with £5,000 or more in the bank who are not yet registered so there’s a lot to go for,” said Mr Nicholson.
“Customer awareness of Savers prize draw is around 70 per cent. Some people have just not got round to it yet.”
Lloyds’ chief executive Antonio Horta-Osorio said there were encouraging signs at the state-backed lender, which is still 25 per cent taxpayer owned.
He plans to publish an update on his strategy in the autumn, having now overseen the bulk of a three-year transformation plan.
Lloyds said its performance has strengthened its case to restart dividend payments for the first time in six years.
The bank is to ask the financial regulator for permission to begin paying “modest” dividends again.
Lloyds was one of the UK’s highest dividend paying stocks prior to its £20.5bn state bailout following its purchase of Halifax bank of Scotland at the height of the banking crisis.
The Government is keen to sell its remaining shares in Lloyds before the next election in 2015, having already sold a 13.5 per cent stake, raising £7.4bn for the state.
Lloyds’ spin-off TSB reported a 17 per cent fall in profits to £78.6m as it counted the cost of operating on a stand-alone basis and no longer benefiting from the economies of scale of a larger group. It holds a 4.2 per cent share of the current account market.