(Sharecast News) - Lloyds Bank increased its bad debt provision in the first quarter citing downside risks from the impact of US tariffs, while profits fell on the back of higher costs.
Britain's biggest lender lifted its impairment charge to £309m from £57m a year earlier. Net income rose 4% to £4.4bn while pre-tax profit fell 7% to £1.53bn as the bank reaffirmed full-year guidance.

Net interest margin, the difference between what it pays on savings and charges on loans, rose to 3.03% from 2.97% in the previous quarter.

Lloyds said it made a £100m central adjustment "to address downside risks to the base case related to the potential impact from US tariff policies announced at the start of April".

"Initial non-UK tariffs announced in the first few days of April, and the immediate market response were larger than expected," the bank said on Thursday.

"These were becoming apparent around the balance sheet date and were determined to not be fully captured within the modelled divisional allowances. This is partially offset by benefits .. from small increases to house price and wage growth expectations."

Lloyds also reported its busiest day ever for mortgage lending in March, as first-time buyers stampeded to get ahead of a rise in stamp duty in England and Northern Ireland.

Mortgage balances grew by nearly £5bn in the three months to the end of March as it lent to 20,000 first-time buyers in that period. The bank completed mortgages for a record 5,000 homebuyers March 27 alone.

The bank, which is the Uk's biggest provider of car loans, did not make any further provisions for motor finance after it set aside £700m in February for potential compensation over the car loan commission scandal. A supreme court ruling on which customers should be compensated is expected in July.

"Unlike Barclays, which is a beneficiary of market volatility thanks to the trading part of its investment banking business, the current uncertainty is only bad news for Lloyds," said AJ bell investment director Russ Mould.

"The loan book offers evidence of decent demand as the mortgage market picks up and overall, the company seems to be in reasonable shape. Judgement day on the motor finance scandal, which has helped put a brake on the share price, is expected in July but at least Lloyds did not feel the need to increase its provisions in this area."

Reporting by Frank Prenesti for Sharecast.com

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