Lloyds: bad debt will ease after lending criteria toughened

12 December 2006
Retail customers' bad debt charges will be "be no higher" than during the first half of the year, according to Lloyds TSB.

In the first six months of 2006, Lloyds' retail business lent £632 million to consumers.

The bank's chief executive Eric Daniels expressed concerns about lax consumer attitudes to debt repayment in August.

But Lloyds TSB now states that "the rate of growth in bankruptcies has shown some early signs of moderating".

Its trading update underlined improved collection procedures for bringing in debt repayments adopted by the banking group, which has made lending criteria more stringent to avoid rising bad debt figures.

The bank's statistics pointed, however, to the fact that individual voluntary arrangements (IVAs) continue to rise – between July and September, 12,228 people took out new IVAs.

In the last quarter, lenders sought to recover around £0.5 billion in bad debts through County Court Judgements against borrowers, according to Credit Action UK.

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