In an interim statement today, the British lender said corporate bad debts are rising “significantly” and forecasted a 50 per cent increase this year in the deteriorating economic environment.
The group said margins had been dented by falling base rates and higher funding costs. It also said “excellent progress” had been made in the integration of HBOS.
Chief executive Eric Daniels says: “Whilst we continue to expect difficult economic conditions to prevail over the next year or so, we believe the strengthened group will be able to comfortably manage through the expected near-term economic downturn and focus on enhancing the group’s prospects for long-term growth.”
By 9.10am, shares in the company were down 8 per cent to 104.10p as investors digested the news.