Gross mortgage lending was £12.3bn in the first half of 2012 which was equivalent to an estimated market share of 18%.
The bank said this was driven by reduced customer demand for new credit, existing customers continuing to reduce their personal indebtedness, non-core lending run-off and the retail division of the bank maintaining a “sustainable approach to risk”.
During the first half of the year Lloyds continued to increase its lending to first-time buyers helping over 25,000 customers buy their first home in the first half of 2012, equivalent to one in every four in the UK.
New lending focused on home purchase with over 70% of lending being for house purchase rather than re-mortgaging.
The reduction in lending to customers was in part due to the repayment of unsecured debt where balances reduced by £1.1bn or 5%.
Secured balances fell by £4.7bn or 1% of which £0.7bn was a reduction in non-core mortgage balances.
Lloyds said: “We are committed to supporting the UK housing market and first-time buyers in particular. Our new mortgage lending continued to be focused on home purchase with over 70%of lending being for house purchase rather than remortgaging.
“Retail remains the UK’s largest lender to first-time buyers, helping over 25,000 customers buy their first home in the first half of 2012, supported by a number of propositions including NewBuy, stamp duty and local lend-a-hand schemes.”
Lloyds’ risk-weighted assets fell 3% largely driven by lower lending balances while impairment as a percentage of average advances fell to 0.43% in the half year to 30 June 2012 from 0.44% in the half year to 31 December 2011.
The group loan to deposit ratio reduced to 126% (core: 103%) and its core tier 1 ratio increased to 11.3%.
Its funding position further strengthened with wholesale funding decreasing by £37bn in the first half.
Lloyds said: “We continue to actively support sustainable growth in the UK economy through the focused range of products and services we provide to our business and personal customers, as well as through partnerships we have built with industry and Government.”
The bank’s results also revealed it is on track to exceed its SME Charter commitment of £12bn of lending in
2012 through the core commercial business and has now increased this commitment by £1bn given the benefit of the UK Government’s Funding for Lending Scheme.
Commercial’s core net lending balance growth of 4% compares with the continued contraction of SME lending across the industry reported by the Bank of England.
Commercial lending by Lloyds has supported over 64,000 start-up businesses already in 2012 making a total of over 292,000 towards its three year commitment to help 300,000 businesses.
António Horta-Osório, Lloyds group chief executive, said: “These half-year results show a continuation of what we delivered in the first quarter: significant balance sheet reshaping and another resilient performance against a backdrop of economic challenges and a lack of public confidence in our industry.
“We are on track to deliver our strategic aims and we are making significant progress with our financial targets.”
Meanwhile Lloyds general Insurance profits reduced by 30% to £158m due to increased weather related claims in 2012, an £18m cost of underwriting pet insurance for customers whose pets have pre-existing conditions and the impact of the continued run-off of the PPI book.
During 2011 and the first half of 2012 Lloyds has charged a total provision of £4,275m in respect of payment protection insurance policies. Following an increase in the volume of complaints received Lloyds said it had decided to increase the provision by £1,075m in the first half of 2012.
The bank posted a statutory loss before tax of £439m including a further provision relating to costs of customer contact and redress on legacy Payment Protection Insurance business of £700m in the second quarter following an additional £375m provision in the first quarter.
Horta- Osório also confirmed the sale of its Project Verde branches to The Co-operative
Group plc which he said “will establish them as an effective competitor in the UK banking market”.
And he added: “We believe there is real competitive advantage in moving faster to become a ring fenced UK retail and commercial bank, and this will be another important step toward providing sustainable returns for our shareholders and support to our customers and communities.
“By doing that we will return the bank to profitability and that will ultimately give taxpayers the opportunity to get their money back.”
