Lloyds didn’t actually announce any specific figures today. But it said that profits in its high street banks were improving, and that its Halifax and C&G arms, the country's biggest mortgage lenders, managed to do ok despite falling house prices - largely thanks to customers moving from fixed-rate mortgages to its standard variable rates.
There’s a glimmer of hope here for businesses too. Banks have been heavily criticised for not lending enough - but the good news is that Lloyds has committed to throw £44bn in their direction by March, and has apparently already doled out £35bn by the end of its third quarter. Which is a start, at least. The bank is of course 40% owned by the taxpayer, so it’s reassuring to hear that it's diverting some of our money to the places where it is most needed.
Which brings us on to bonuses. While Daniels was keen to stress that he’s looking to 'share the success' with the group’s 100,000 employees, he also pointed out that this needn’t generate ‘eye-grabbing headlines’. As Daniels says, this is high-street banking, not investment banking, which makes it a relative saint in the ‘lining their own pockets’ stakes.
But Daniels still has some work to do before he hangs up his cheque book. His main headache lately has been the bank’s impairment charges, largely caused by bad lending within HBOS. Lloyds has reassured the market that these are falling, particularly in the wholesale market. But this encouraging progress has been partially offset by higher charges in its wealth and international divisions, especially in Ireland and Australia, which have been rising faster than expected.
His other big problem will be ensuring a ready supply of cash. Lloyds relies on £132bn of facilities from the Bank of England and other central banks to ensure it has enough liquidity to keep operating. And these measures, put in place during the financial crisis, will expire by the end of next year. Lloyds is like a kid on a bike, needing to convince the City it can ride alone without these stabilisers.
But overall Lloyds is doing all right. It has started to reduce its reliance on external funding – Daniels said £7bn of borrowing from ‘certain central banks’ had been paid back. And it’s generating fresh funds, having issued £25bn of new bonds by the end of September, and a further £2.5bn in the public markets in October.
With the likes of RBS and HSBC reporting their Q3s on Friday, this glimmer of hope from Lloyds bodes well for the sector as a whole. Which, hopefully, should be a bonus for businesses looking to borrow.