The loan book at Lloyds’ Black Horse motor finance division grew 3% to £14.2bn in the six months to June, as a cautious underwriting kept margins contained.
Lloyds said car finance business saw expansion “ahead of the market”. The new vehicle book was stable at £8.2bn, while the used vehicle segment hit £5.7bn, up 7.5% on the same period last year.
Margins were around 4% for both the new and the vehicle segment. The bank said margins had been shrinking in recent years as its focus shifted to lower-risk business and new cars.
“The UK motor finance book continues to perform well given resilient car prices and is benefitting from our conservative approach to residual values and prudent provisioning,” the bank said.
It put the size of its residual value provision fund at £200m, £76m of which related to recently-written contracts.
Impairments for the first half of 2018 totalled £49m, down from £66m at year-end 2017. Expected credit losses went up 3% to £266m, which the bank attributed to expansion in portfolio and the maturation of some contracts.
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