Bad debts at Lloyds TSB’s retail banking division have increased by 34 per cent over the past year, the bank has admitted, half of which involved customer bankruptcy.
The number of bankruptcies in the UK has doubled since laws were changed to make the process of claiming insolvency protection less restrictive.
The company said that greater numbers of customers were struggling with their repayments and that it was facing declining revenue from its credit divisions.
The bank tightened lending requirements at the end of 2004 and again at the end of last year however, and said that it expected more stability during the second half of 2006.
“As a result of the improved quality of new business written during 2005, we continue to expect greater stability in the level of retail impairment in the second half of 2006, compared to the first half of the year,” said Lloyds TSB in trading statement.
“People are getting more debt forgiveness and it removes some of the stigma of defaulting,” the chief executive of Lloyds TSB told the Times.
“As a member of society, I am concerned what happens to values,” he added. The consumer debt figures failed to dent an upbeat estimate of 2006 growth, however.
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