Lloyds Banking Group PLC (LSE:LLOY) boss Charlie Nunn was keen to highlight the “challenging” environment faced by customers in these uncertain economic times but is the bank engaging in its own version of greedflation and profiteering - starving savers of better deals as interest rates soar?
Because while the high street lender continued to swell the coffers, raking in bumper profits in the first quarter, savers were left scratching their heads as they were, once again, largely ignored.
The FTSE 100-listed bank was keen to point out how it has benefited from the increase in interest rates, with today’s quarterly results showing a 15% increase in net income to £4.7bn while statutory pre-tax profit jumped 47% to £2.26bn, ahead of the average analyst forecast of £1.95bn.
All well and good for shareholders. The bank also enjoyed a healthy net interest margin of 3.05% - the difference between the interest income generated and the amount of interest paid out to lenders - although this was below the number posted by peers Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG).
But amidst this growth, saving rates have been left behind. A quick scan of Lloyds savings accounts shows its Easy Saver account offers a mere 0.85% on balances of up to £25,000 compared to the current base rate of 4.25%.
What’s worse for customers is with interest rates close to peaking the only way from here is probably down.
The problem for Lloyds and other banking giants is that as it strives to please shareholders and the City with big profits, dividends and buybacks, the competitive landscape for customers' hard-earned cash is heating up.
Countless rivals, ranging from Chip Financial, Shawbrook and Sainsbury's Bank to the Post Office, Nationwide and Investec, offer much higher rates on instant access savings accounts while others such as Apple and Goldman Sachs (NYSE:GS) have joined forces to add further competition to the market.
Traditionally, the high street stalwarts have relied on inertia and, dare I say, a degree of ignorance to retain business.
But in a world where one click can move thousands of pounds and when financial information is also a click of a mouse away banks are more vulnerable than ever.
Indeed, Lloyds blamed the increased competitive landscape for a fall in deposits in the first quarter but it only has itself to blame. By failing to pass on the benefits of increased rates to savers it has left the door open to its rivals and new entrants to the market.
Concerns over margins sent the shares 4% lower today despite better profits than expected.
And with competition expected to intensify and a fall in interest rates likely to squeeze margins and profitability in the second half of the year the mood music from the City and the public could soon take a turn for the worse.