InvestmentsFeb 22 2023

Embark sales total £3bn since Lloyds acquisition

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Embark sales total £3bn since Lloyds acquisition
Last year, Lloyds launched a direct-to-consumer ‘ready-made investment offering’ into customers’ mobile banking apps using Embark’s service [Jason Alden/Bloomberg]

Embark has generated £45mn in net income since its acquisition by Lloyds Banking Group, with estimated sales volumes of £3bn.

Across the bank’s investment and retirement business - which includes Embark - open book assets under administration reached £146bn last year, up 23 per cent on 2021.

Overall, income across this arm of the bank was also up 12 per cent, which Lloyds partly put down to the inclusion of income from Embark.

Restructuring costs rose to £80mn for the year, from £37mn in the first half of 2022, which included the costs of integrating Embark.

This figure was just a fraction of the bank’s last restructuring total in 2021, which reached £452mn to cover a major technology revamp.

But operating costs did rise 16 per cent, to £143mn, which the bank said reflected higher planned strategic investment costs, the rebuilding of variable pay and the inclusion of Embark.

Lloyds intends to grow its new mass affluent service over the coming years.

Embark’s balance sheet was not broken down further in the bank’s results, published this morning (February 22).

In October, Embark published its full-year results for 2021 on Companies House. It showed a loss before tax of £33mn.

This was a significant reduction on its £341.9mn loss the prior year, which reflected redress costs associated with Rowanmoor - the pension firm it was separated from when Lloyds completed its acquisition of Embark in January 2022.

Administrators of Rowanmoor Personal Pensions Limited (RPPL), the £1.4bn self-invested personal pension business which collapsed last August, have since confirmed that Embark shareholders put £71mn into its former subsidiary Rowanmoor to cover any potential redress owed to clients.

Mortgages and protection

Elsewhere in its results, Lloyds said it grew its open mortgage book by £6.3bn last year. It also loaned some £14.3bn to first-time buyers.

Lloyds’ mortgage book was nearly £300bn in size at the end of last year, up from £293.3bn at the end of 2021.

A number of banks have reported an uptick in their mortgage businesses, buoyed by the government’s "mini" Budget last year which sent up interest rates.

Lloyds’ underlying net interest income was 14 per cent higher last year, benefitting from the rising rate environment.

The bank said it has proactively contacted customers to offer support due to the rising cost of living, including mortgage customers on standard variable rates who could benefit from a product transfer.

This follows calls from the Financial Conduct Authority for lenders to offer options to customers faced with unmanageable interest payments.

The bank’s protection income was also up on 2021, from £52mn to £64mn following its acquisition of hybrid advice firm Cavendish Ware Online.

HBOS, PPI & Clerical Medical

A further £255mn was spent in legal and regulatory fees last year, leaving an unutilised balance of £803mn - down from its £1.2bn balance last year.

The spend went towards a review instigated by Dame Linda Dobbs into the bank's handling of the HBOS Reading scam which dates back to the early 2000s.

It also went towards payment protection insurance (PPI) claims. The bank has incurred nearly £23bn in costs so far from such claims, and said today a number of key court judgments are due to be delivered this year.