Bank of Scotland profit falls 50% to £1.1bn

Bank of Scotland plc — owned by Lloyds Banking Group — has reported that its 2022 statutory profit before tax fell to £1.137 billion from £2.316 billion in 2021.

“The benefit of lower operating expenses was more than offset by the effects of lower income and an impairment charge (compared to a credit in the prior year), in part reflecting the deterioration in the economic outlook,” said Bank of Scotland.

The bank said the 2022 impairment charge of £632 million, compared to a net credit of £375 million in 2021, “reflected strong observed credit performance, but was impacted by a deteriorating economic outlook partly offset by COVID-19 releases.”

Bank of Scotland said total income for the year fell 14% to £4.931 billion “as the continued recovery in customer activity and interest income benefits from UK Bank Rate changes were more than offset by higher funding costs.”

Net interest income was £4.547 billion in 2022, down from £5.324 billion in 2021.

“This was driven by higher funding costs on amounts due to fellow Lloyds Banking Group undertakings which more than offset the effects of average interest-earning asset growth and interest income benefits from UK Bank Rate increases,” said Bank of Scotland.

Staff costs were £47 million or 4% lower at £1.084 billion in 2022 compared with £1.131 billion in 2021.

Partly offsetting these decreases, premises and equipment costs were £33 million higher at £173 million in 2022 compared with £140 million in 2021.