Lloyds Banking Group's profits fell as High Street banks reserved more funds than expected to deal with the possible bad debts of Donald Trump's trade war.

The group's brands include Lloyds, Halifax and Bank of Scotland, with net income up 4% to £4.39 billion compared to the same period last year, but its pre-tax profit fell 7% to £1.52 billion, mainly due to higher costs and expenses.

Lloyds has now set aside £309 million on its balance sheet to collect possible bad debts, compared with the previous guide of £274 million. The higher figures include a net fee of £35 million, preparing for the possible impact of U.S. presidential tariffs on the economic outlook.

William Chalmers, the bank's chief financial officer, said its direct contact with the United States was "very limited", but it remained "warned" to deal with any potential impacts within the UK.

The bank also reported the busiest mortgage date ever in March as thousands of first-time home buyers were eager to lead England and Northern Ireland stamp duty and returned to pre-2022 levels in April.

Lloyds said its mortgage balance had risen by nearly £500 million in the three months to the end of March. During this period, it loaned out 20,000 first-time home buyers, including a record 5,000 home buyers who completed the day on Thursday, March 27. The bank said the overall completion rate rose by 50% in March.

The stamp duty change will take effect on April 1. Now first-time home buyers must pay taxes on homes worth more than £300,000, below £425,000, while first-time home buyers’ threshold for lowering interest rates has been reduced from £625,000 to £500,000.

The zero-tax stamp threshold for all housing in England and Northern Ireland has also been reduced from £250,000 to £125,000. The bank now expects house prices to rise 2.9% this year.

Lloyds' net interest margin measures the difference between the interest it receives from the loan and the interest it pays to its clients' deposits, rising from 2.97% in the previous quarter to 3.03%.

The bank is also the country's largest provider of auto loans and does not outline any further provisions for auto financing. In February, it announced it would allocate £700 million to potential compensation for the Auto Loan Commission scandal. The Supreme Court ruling is expected to compensate customers in July.