Wealth & International Arm Of Lloyds Suffers Heavy Impairment Loss

Tom Burroughes, Group Editor, London, 5 May 2011


The Wealth and International segment of Lloyds Banking Group, posted a substantial impairment charge of £1.441 billion (around $2.38 billion) in the first three months of 2011, against £2.55 billion in the same period a year ago.

Results issued earlier this year showed that private banking at the UK banking group – partly owned by the UK government – had made a profit, however, and the statement today did not explicitly mention the private bank or its figures. (The Wealth and International segment includes overseas banking operations with heavy exposure to countries such as Ireland, which have sustained heavy bad loan problems).

“The impairment charge of £1.441 billion in Q1 2011 was significantly higher than in Q1 2010 due to increased impairment charges in non-core portfolios in Ireland and Australasia,” Lloyds said in a statement today. The devastating earthquake in New Zealand earlier this year added to the problems, it said.

The statement did not give many other details about the wealth business of Lloyds. For the banking group as a whole, when measured on a “combined business basis”, it logged profit before tax of £284 million, (down from £1.1 billion), affected by equity conversions, the bank said.

The group sustained a larger-than-expected impairment charge of £2.61 billion (Q1 2010: £2.415 billion).  The charge was approximately £500 million more than initial expectations, predominantly due to Ireland.

Lloyds reported a core Tier 1 capital ratio of 10 per cent.

On a statutory basis, Lloyds suffered a pre-tax loss of £3.47 billion in the first quarter of 2011, principally reflecting the £3.200 billion PPI provision (Payment Protection Insurance), plus certain business integration costs.


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