Lloyds Banking Group has confirmed that it will cut 9,000 jobs and close 150 branches over the next three years, as it reports a 5 per cent drop in its profits before tax for the first nine months of this year.
The group’s strategic update statement, published today (28 October) detailed the next phase of its ‘simplification’ strategy to achieve run-rate savings of £1bn per annum by the end of 2017.
Alongside investment to simplify processes and increase automation, the group confirmed that it anticipates a reduction of approximately 9,000 full time roles across the business while building new capability in digital and IT.
“We will also further rationalise our legal entities, including our life companies,” the report added.
It also confirmed that it plans to close around 150 branches, as it seems to “optimise” its network by consolidating mainly urban branches in overlapping locations. We anticipate this will lead to a net reduction of about 150 branches.
The statement confirmed that over 90 per cent of Lloyds and Bank of Scotland customers will continue to have a useable branch within five miles of their home, while the Halifax branch network will be maintained.
The group stated that it has identified other growth opportunities, including financial planning, retirement and unsecured consumer lending.
“In Insurance, financial planning for retirement is a critical need for UK customers and one that the group is uniquely placed to serve,” read the statement. “By connecting products, services and customer insight already in existence in Scottish Widows, we will enable our retail customers to make long-term preparations for retirement, growing customer assets by over £10bn by 2017.”
Furthemore, its interim management statement revealed the group’s profit before tax fell 5 per cent to £1.61bn over the first nine months this year, compared to the same period in 2013.
This decrease includes charges relating to legacy provisions of £2bn, including an additional £900m for PPI in the third quarter due to “increased reactive complaints and expected increased remediation and uphold rates”.
George Culmer, chief financial officer, explained that the £900m PPI increase brings the total amount provided for redress to £11.3bn.
Total costs incurred in the three months to 30 September were £622m, including £156m of administration costs.