Lloyds Banking Group has announced plans to cut another £2bn of costs as part of a four-year strategy that its chief executive, Charlie Nunn, says will use artificial intelligence and new technology to drive growth. The lender, the UK's largest high street bank, reported a better-than-expected rise in second-quarter profits to £2.3bn, a 14% jump from the same period last year.
Strategic investments and AI rollout
Nunn said the strategy, due to launch in January, will involve investing £13bn into the business by 2030, including for “pioneering technology” to attract new customers, improve efficiency and boost shareholder payouts. The bank plans to roll out “AI-powered advice” for wealth and workplace pensions, use AI to offer personalised offers based on customer behaviour, and provide support to relationship managers.
“We can make it even better, and even simpler, because we’re not good enough today, relative to our ambition,” Nunn said, praising colleagues for guiding customers through increasingly complex services.
Impact on staff and branches
When asked how the £2bn in planned cuts would affect staff, Nunn did not give details of potential job losses, but said he would consider the same business areas as in the past five years, including better technology, reviewing physical office space and improving productivity. “That is going to impact work. It is going to require us to continue to re-skill people and hire new people, but that’s been my history for 30-odd years in financial services,” he told journalists.
Regarding Lloyds' 550 branches, Nunn said: “It will be important part of our proposition, but we’re going to follow the customers and our customer data around our branches.”
International expansion and new products
The strategy also includes international expansion, with Lloyds aiming to grow its corporate and institutional bank in the US and Europe, marking a shift from the retrenchment after the 2008 financial crisis. Nunn said he is betting on AI and blockchain technology to cut mortgage approval times to about three days, and the bank will boost rewards and loan discounts to retain loyal customers.
Lloyds will also focus on its car loan division by creating a one-stop-shop app for drivers wanting to buy, insure and set up charging points for electric vehicles. This comes as the division still awaits resolution of the motor finance commission scandal.
Market reaction and analyst comment
The bank increased payouts for shareholders, announcing a 1.58p per share dividend and its first ever half-year share buyback worth £1bn. Lloyds’ share price rose 1.7% on Thursday morning.
Chris Beauchamp, chief market analyst at IG, said: “Nunn’s strategy to move away from the traditional lending business continues to deliver for Lloyds, though it is still a work in progress. The push towards the US and more corporate banking is understandable, but Lloyds would hardly be the first UK name to follow this demanding path – success here is far from guaranteed.”
