Lloyds Banking Group blames the rise on the economic slowdown and higher unemployment, but says it remains confident about the strength of its mortgage portfolio.
Despite this, the group’s market share of net new mortgage lending has grown to 27.5% from 6.7%, re-flecting its acquisition of HBOS in September.
A statement in its results reads: “In the past 12 months the group has made significant progress in building its mortgage business in a mortgage market that has slowed considerably.
“The group continues to manage for value, targeting growth in profitable new business rather than overall market share.”
Lloyds TSB reported pre-tax pro-fits of 807m, a fall of 80% from 2007’s 4bn. By contrast, HBOS made a pre-tax loss of 10.8bn.
Discussions between Lloyds Banking Group and the Treasury are rumbling on over the govern-ment’s Asset Protection Scheme, with no agreement yet on whether it will participate.
The group issued a statement to the London Stock Exchange saying: “Discussions with the Treasury are progressing and are well advanced. While there can be no certainty about the outcome, the group will provide a further market update in due course.”