Lloyds to Cut 3,000 Jobs as it Braces for U.K. Slowdown After Brexit Vote

By Max Colchester 

LONDON-- Lloyds Banking Group PLC is to cut 3,000 extra jobs as the British bank warned that Brexit will hit the U.K. economy in the months to come.

The U.K.'s biggest retail bank Thursday warned that "a deceleration of growth seems likely" following Britain's vote to leave the European Union. Faced with a combination of lower interest rates and muted economic growth the bank presented a plan to cut an extra GBP400 million ($528.9 million) of costs, by chopping thousands of jobs, closing some two hundred branches and selling off unwanted properties.

So far the bank has yet to see any real impact from Brexit among retail customers, Lloyds Chief Executive António Horta-Osório said. But "It is still early days," he added. Among corporate customers, however, activity had been declining even before last month's vote. Despite the looming slowdown, Lloyds doesn't have any plan to ratchet back lending or cutting exposure to the U.K.'s commercial real-estate market, Mr. Horta-Osorio said.

His comments came as the bank, which is 9% owned by the British government, presented sturdy first half results.

The lender reported a rise in revenue to GBP18.43 billion, compared with GBP11.35 billion a year ago, while net profit came in at GBP1.59 billion, compared with a loss of GBP211 million in the same period last year. The bank is increasing its interim dividend by 13% to 0.85 pence a share.

It is unclear how future dividend payments could be affected by economic uncertainty.

"It is possible that this capital generation may be somewhat lower in future years than previously guided," the bank said. Mr. Horta-Osorio said that he believed the Bank of England would likely cut interest rates by 0.25 percentage point at its next policy meeting.

Write to Max Colchester at [e-mail]

(END) Dow Jones Newswires

July 28, 2016 03:40 ET (07:40 GMT)

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