Demand for debt services among Lloyds Bank customers jumped 30% in the first six months of the year as the cost of living crisis takes its toll.
Amid pressure on living standards, the bank’s research indicates that three-quarters of its 26 million UK customers were worried about rising prices and the impact it is having on their savings.
Lloyds chief executive Charlie Nunn said customers were trying to get their finances under control by consolidating debt.
Nunn added that eight in 10 of his customers have less than £500 in savings in their current and savings accounts.
Lloyds Banking Group is the country’s largest mortgage lender and is often seen as a gauge of the UK economy.
According to his research, 20% of his customers are already reducing their discretionary spending to ensure they can cover the cost of essential items.
“Customers are worried, and they should be,” Nunn told the BBC. “We have seen some areas where there are real points of challenge.
“Around 80% of UK individuals, customers and families have less than £500 in savings in their current account and savings account. They may have money elsewhere, but what we can see is less than £500.
Despite the sharp increase in the number of customers struggling with debt, Nunn said only 1% were unable to pay their usual bills.
UK inflation hit a 40-year high of 9.1% in May and is expected to hit 11% later this year amid soaring energy, food and commodity costs.
The lender reported in the spring that its customers were already starting to tighten their belts, with more than a million of them canceling gym memberships and video streaming contracts.
Lloyds said last month it would give more than 64,000 of its employees a £1,000 bonus to help with the cost of living.
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Nunn, who took over as chief executive of the banking group in August 2021, said Lloyds customers were concerned about the economy but warned there was a danger the UK could get into a recession.
“We’re concerned that I think we’re collectively putting ourselves at risk from too negative an outlook,” Nunn said.
“There are pockets of strength in the economy. There is a significant portion of consumers in the UK who are strong and really want to spend and create that demand and we can continue to see opportunities to invest in growth.
Travel is one of the spending bright spots, the group said, reporting that credit card spending during the holidays increased by 300%.
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