The Lloyds share price (LON:LLOY) sank on Thursday as the bank released their first half report that highlighted the scale of COVID-19 related costs.
Lloyds profit before tax was completely wiped out as the bank’s profit for the period swung from a £2.9bn in the half year in 2019, to a pre tax loss of £602m in the six months to 30th June.
Lloyds managed to produced a net profit of £19m only after the impact of a £621m tax credit.
Lloyds shares fell over 8% in early morning trade on Thursday.
The further provision of £2.4bn in the latest quarter means Lloyds has set aside a total of £3.8bn to deal with the impact of coronavirus.
Increased provisions for bad debts, coupled with income falling 16% to £7.4bn, were the main drivers behind the destruction of profit at Lloyds.
Lloyds drop in income was in contrast to Barclays who reported an increase in revenue, largely driven by higher investment banking income.
Lloyds Bank has a greater focus on retail and business banking such as mortgages, credit cards and loans which saw reduced activity during the coronavirus lockdown.
However, the introduction of government schemes such as the Bounce Back Loan helped Lloyds maintain a relatively steady loan book as mortgage activity fell sharply.
“The impact of the coronavirus pandemic in the first half of 2020 has been profound on the way we live our lives and on the global economy. We remain fully focused on helping our customers and the UK economy recover, in collaboration with Government and our regulators,” said António Horta-Osório, CEO of Lloyds.
“I want to express my sincere gratitude to all my colleagues across the Group for their dedication and persistence which have allowed us to deliver vital banking services to our customers effectively throughout the pandemic.”
“Although the outlook is uncertain, the Group’s financial strength and business model allow us to help Britain recover and play our part in returning our country to prosperity. Our customer focused strategic plan remains fully aligned with the Group’s long term strategic objectives, the position of our franchise and the interests of shareholders.”
Lloyds share price
Lloyds shares fell sharply on the news taking the Lloyds share price to the lowest level since 2012.
Lloyds is also now the worst performing UK bank in 2020 with shares down 58%. NatWest Group comes in a close second trading 55% lower on the year.