In half-year financial results published today (July 27), the bank said restructuring costs climbed to £47mn over the six-month period, compared to £10mn in the first half of 2021.
It said the increase “included costs associated with the integration of Embark”, citing no other big costs as part of the total.
The bank's operating costs also increased by £53mn between January and June this year, up 11 per cent on last year. Lloyds said this was driven by the inclusion of Embark, alongside higher planned strategic investment costs and increased variable pay.
On the technology side, some £150mn has already been invested into Embark since its £390mn acquisition a year ago to cover the launch of its direct-to-consumer platform, product upgrades and migrations of advised clients to FNZ.
According to Lloyds' results, Embark has contributed a £20mn revenue to the bank’s insurance and wealth business, generated by around £2bn in sales volumes.
The bank recorded £4bn of net new money flowing through the insurance and wealth business over the period, taking total open book assets under administration to £156bn - a figure which includes assets managed by Embark.
Lloyds said the Embark onboarding was “going to plan” with continued investment into the group's direct-to-consumer offering, which it expects to launch during the second half of 2022.
Further planned investment has also been promised for Embark’s intermediary offerings - which are its two adviser platforms, Advance by Embark, and Embark Platform.
In June, an Embark spokesperson told FTAdviser it was upgrading Advance by Embark to the Embark Platform technology so all of its adviser users can benefit from the same technology, following a report which labelled Advance a “digital process laggard”.
Overall, Lloyds posted a £3.7bn profit for the half year to June 31, 2022, down on £3.9bn over the same period last year but up on analyst predictions.
The bank has added £3.3bn to its open mortgage book so far this year, with customer lending edging up 1 per cent.
It said flexible mortgage adviser access, with more than 900 appointments per week “outside branch opening hours”, underpinned its mortgage book growth.
With mortgage rates rising rapidly in the first half of this year, Lloyds’ underlying net interest income was boosted by 10 per cent. Though this was partly offset by mortgage margin compression, saying “pricing has lagged rate increases”.
Lloyds half year profits were also offset by £377mn in an underlying impairment charge, which the bank has set aside for potential increases in loan defaults.
On the protection side of the business, the bank said new business income was up 50 per cent year-on-year during the six-month period.
New business income totalled £21mn, compared with £14mn during the same period last year. Overall, protection income edged up £8mn this half-year compared to 2021.
Lloyds has plans to become a top three protection provider by 2025, and bought hybrid protection adviser Cavendish Online for £12mn as part of these plans.
In the past six months, the bank said it has grown its protection market share by 1.5 percentage points.
ruby.hinchliffe@ft.com
