Lloyds Cardnet recovers from Covid

Focused on Britain’s High Street heartland, Lloyds Cardnet suffered more than most during the Covid lockdowns. But as the nation got back to business during 2021, results have improved significantly. Management is pleased that trade has now “returned to normalised levels” although, looking forward, it warned that the cost-of-living crisis might be “negatively impacting on consumer discretionary spend in retail, travel and hospitality sectors.

In the 2021 annual filings at Companies House, Cardnet reported a small recovery in payment volume but, with good cost control, this resulted in a much bigger uplift in profitability. 

Cardnet is a joint venture between Lloyds Bank and First Data (Fiserv) with the bank holding 51%. Lloyds provides sales and marketing through its business banking network. First Data runs the back office and supplies several products including Clover. Cardnet also has relationships with 3rd parties including Liberis for Merchant Cash Advance and Qikserve for a mobile ordering app.

Total payment volume rose 4% to £66bn on the back of significantly higher total transactions – up 13% to 1,062m. Increasing use of contactless for everyday transactions is the most likely factor driving down ATV  8% to £62.15.

Credit, although a small proportion of the total, outperformed. Volume was up 18%. Debit transaction count grew 12% but ATV was sharply lower.

Net revenue (reported by Cardnet as fees and commission income) rose 11% to £275m with the take rate ticking up 3bps to 0.42%. Profit before tax rebounded 48% to £43m giving a very healthy operating margin of 15.6%.  After two years with no dividend, Cardnet was able to pay out £39.5m after year end.

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