Bank of Scotland plc, owned by Lloyds Banking Group, has reported a profit before tax of £427 million for the first half of 2024, compared to a loss before tax of £112 million for the same period in 2023.

“This was due to higher total income and a lower impairment charge, partly offset by higher operating expenses,” said Bank of Scotland.

Total income for the period was £2.039 billion, an increase of 16% on the first half of 2023.

Net interest income was £1.833 billion, compared to £1.565 billion for the same period in 2023. “This included the effects of the mortgage book rolling on to higher rates, which more than offset the impact of higher deposit and funding costs,” said Bank of Scotland.

“Other income of £206 million was £20 million higher than the first half of 2023, as the impact of increased net trading income more than offset the impact of changes to commission arrangements with Scottish Widows.”

Operating expenses of £1.608 billion were 8% higher than in the first half of 2023 “reflecting planned strategic investment, elevated severance charges and continued inflationary pressure.”

Total assets of £328.7 billion were £6.341 billion higher compared to £322.430 billion at December 31, 2023.

Total liabilities of £312.602 billion were up £6.771 billion compared to £305.831 billion at December 31, 2023. “This was driven by increases in balances due to fellow Lloyds Banking Group undertakings of £4,641 million and an increase in customer deposits of £1,356 million,” said said Bank of Scotland.

“Customer deposits increased as a result of inflows into limited withdrawal and fixed savings products.

“Total equity decreased by £430 million from £16,599 million at 31 December 2023 to £16,169 million at 30 June 2024. The movement reflected an interim dividend of £650 million which was partially offset by attributable profit for the period.”

Bank of Scotland said its common equity tier 1 (CET1) capital ratio fell from 14.9% at December 31, 2023, to 13.4% at June 30, 2024. “This largely reflected profits for period offset by the dividend payment in the second quarter of the year, the accrual for foreseeable ordinary dividends and an increase in risk-weighted assets,” said Bank of Scotland. “The total capital ratio reduced to 18.8 per cent (31 December 2023: 20.4 per cent) reflecting the reduction in CET1 capital, the increase in risk-weighted assets and the reduction in eligible provisions recognised through tier 2 in the period.”

Bank of Scotland said its risk-weighted assets increased by £674 million to £80.928 billion at June 30, 2024, largely reflecting impact of lending growth.