Lloyds has significantly increased its job-cutting scheme, axing a further 3,000 roles, as it races to reduce costs in anticipation of a cut in interest rates.
The bank has also announced it plans to double its planned branch closures, with 200 more set to vanish from the UK’s high-streets by the end of 2017.
The cuts are in addition to the 9,000 job and 200 branch closures Lloyds announced in 2014.
The announcement came as Lloyds revealed it was being investigated by the Financial Conduct Authority for the way it handled customers who were having difficulty paying their mortgages.
Lloyds reported a £2.5bn pre-tax profit for the half year to the end of June. In the same period last year, it made £1.2bn.
The rise was largely due to a sharp drop-off in payment protection insurance (PPI) compensation payouts, which dented previous profits.
Mark Carney, the Bank of England governor, signalled an interest rate cut would take place during the summer and the City now expects rates will be cut from their 0.5 percent historic low on 4 August.
Lloyds is also blaming a fall in the use of branches by customers for the job cuts. Lloyds, which also owns Halifax, now employs about 75,000 people.
Unions reacted furiously to the cuts. Ged Nichols, general secretary of the Accord union, which represents 22,000 staff who joined Lloyds from Halifax, said he was seeking urgent talks with the bank:
“The loyal, dedicated and customer-focused employees in the Lloyds Banking Group are still reeling from recent job losses. They will be bewildered by today’s news and wonder what has happened that is so catastrophic that these further job cuts and branch closures are necessary. Interest rates might be lower for longer but why are job losses higher and faster? Where will the axe fall next?”
Underlying profits at Lloyds Banking Group have fallen by five percent, and chief executive Antonio Horta-Osorio warned that he expects a “deceleration of growth” following the UK’s decision to leave the EU.
The Group said the increased cost-cutting was as a result of the change in how people do their banking, and due to the chances of interest-rates staying low in the wake of Brexit.
Horta-Osório, said the decision to cut jobs – which will save £400m – had been tough. But, he said, use of branches had fallen by 15 percent year on year, faster than had been the case at the time of the previous announcement to cut jobs.