Bank results have in the past number of years been boosted by the consumer and house-price booms. Now, however, banks are feeling the pinch as higher interest rates and higher bills push the consumers into deeper water, resulting in an increase in bad debts, says Sean Farrell on Reuters.co.uk. Just ask Barclays who last month warned that its bad debt provisions were busy rising ahead of forecasts, due largely to credit-card arrears.
So the good news for Lloyds is, while it may have warned that it could be facing higher retail banking bad debts, the slight deterioration has been offset by the high credit quality in business banking. Moreover, its loan loss charge, as a percentage of outstanding loans, is very much in line with last year's figures.
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