Lloyds reaps £6bn profit by squeezing borrowers with higher rates while not passing on the benefits to savers
- The gap between the rate of interest the bank paid depositors and the rate it earned from people with debts rose 0.08% last year – helping raise profits 13%
- Savers using a Lloyds easy access account get interest of just 0.2% on savings
- Lloyds was the only large high street bank to increase its margin last year
Lloyds has put the squeeze on customers to boost its profits to £6billion last year.
The bank raked in more cash from borrowers amid rising interest rates but failed to pass the benefits on to long-suffering savers, who are stuck with returns far below inflation.
Banks make their profits by collecting deposits from savers and lending them to borrowers.
Lloyds raked in more cash from borrowers amid rising interest rates but failed to pass the benefits on to long-suffering savers, who are stuck with returns far below inflation
The gap between the rate of interest they pay depositors and the rate they earn from people with debts is known as the net interest margin – and the margin at Lloyds rose last year to 2.68 per cent, from 2.6 per cent in 2017, helping to lift profits 13 per cent to £6billion.
Meanwhile savers using a Lloyds easy access account get interest of just 0.2 per cent.
Anna Bowes, of consumer group Savings Champion, said: ‘This is an illustration of how your bank isn’t going to do you any favours when you’re trying to save.
‘High street providers pay some of the worst interest rates for savers, and yet they have some of the largest amounts of deposits.’
Lloyds was the only large high street bank to increase its margin last year.
The retail arms at rivals Barclays, Royal Bank of Scotland, HSBC and Santander were all squeezed, largely because of ultra-tough competition in the mortgage market.
Justin Modray, of financial advice group Candid Money, said: ‘At a time when you might expect banks to be feeling the squeeze, Lloyds has found a way to wring even more money out of customers.
‘It’s a timely reminder that if you’re not getting a good return on your money then you should switch.’
Lloyds has come under fire for not passing the full benefit of Bank of England rate hikes – up by 0.5 percentage points since late 2017 – on to customers.
Lloyds has only put up the rate its Easy Saver account pays from 0.1 per cent to 0.2 per cent.
Lloyds said it offers competitive Isa accounts, and interest margins were lifted by its £1.9billion takeover of credit card firm MBNA in 2017.