Lloyds Q1 profits fall 46%

Lloyds' statutory profits almost halved to £654m in Q1 due to a £790m charge against the redemption of investor bonds known as Enhanced Capital Notes.

Related topics:  Finance News
Rozi Jones
28th April 2016
lloyds bank

Underlying profits, excluding TSB, were flat at £2.054bn. Income of £4.4bn was 1% lower, but operating costs fell by 2% to £2.0bn.
 
Loans to customers rose by £2bn over the year to £457bn.

There was a charge of £115 million in Q1 to cover retail conduct matters. However no further provision has been taken for PPI, where complaint levels over the three months have been around 8,500 per week on average, broadly in line with expectations.
 
Lloyds has now achieved half the target of £1bn of annualised cost reductions by end 2017.
 
António Horta-Osório, Group Chief Executive, commented:

"In the first three months of this year we have continued to make good progress, delivering a robust financial performance and maintaining our strong balance sheet. These results demonstrate the strength of our differentiated, simple, low risk business model and reflect our ability to actively respond to the challenging operating environment. We continue to support and benefit from  a resilient UK economy and remain focused on delivering on our targets to people, businesses and communities as set out in our updated Helping Britain Prosper Plan.

"We have also recently launched our SME charter to help small businesses grow and to provide access to funding. In addition, we continue to make good progress in our strategic initiatives: creating the best customer experience; becoming  simpler and more efficient; and delivering sustainable growth.This  performance, coupled with our differentiated, capital generative, business  model, underpins our confidence in generating superior and sustainable returns as we aim to become the best bank for customers and shareholders."

Laith Khalaf, Senior Analyst, Hargreaves Lansdown, added:
 
“Other banks would like to be where Lloyds is, especially now that it looks to have drawn a line under the whole sorry PPI affair. Capital ratios are strong and there is little need to build ratios up any more, so in future, the bank can give the rest back to investors. Lloyds has been assiduously cutting costs for years and is now reaping the benefit.

"Bad debts are extraordinarily low, because interest rates are low and employment is high. Investors should not expect them to stay this low in the long run. But the combination of low bad debts and Lloyds’ strong cost cutting performance certainly bodes well for earnings in the near term.

"Investors will have to bide their time for the share sale, shelved during the market weakness around the start of the year. The stock is still below the level the government paid for its stake (c.74p) so we do not expect that situation to change in the near term.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.