Lloyds announces profits rise in spite of extra PPI costs
The high street lending giant reported a 6% rise in first quarter underlying pre-tax profits to £2 billion.
Lloyds Banking Group has cheered a “resilient” UK economy as it notched up a hike in first quarter profits, despite taking another £90 million hit from the payment protection insurance scandal.
The high street lending giant reported a 6% rise in underlying pre-tax profits to £2 billion for the three months to March 31, while bottom line profits surged 23% to £1.6 billion.
But it added another £90 million in costs for payment protection insurance (PPI) mis-selling claims, taking its total bill for the saga to an eye-watering £18.8 billion.
Chief executive Antonio Horta-Osorio said: “We have made a strong start to 2018 and have begun implementing the strategic initiatives which will further digitise the group, enhance customer propositions, maximise our capabilities as an integrated financial service provider and transform the way we work.”
He added: “The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth.
“We expect the economy to continue to perform along these lines during 2018.”
Lloyds said the further PPI costs came after the recent Plevin ruling requiring banks to proactively contact customers who have previously had their complaints rejected, although the first quarter charge is lower than the £350 million put by for the scandal a year earlier.
But Lloyds also took £258 million in impairment charges in the quarter, which was more than double a year earlier.
We remain committed to our branch network. George Culmer, Lloyds finance boss
It also revealed £138 million in restructuring costs, including redundancy expenses as it ploughs on with its three-year strategy focused on digital banking.
Lloyds last week announced plans to shut another 49 branches, with the loss of 1,230 roles.
Finance boss George Culmer insisted the bank “remains committed to your branch network”.
“We’re making significant investments in terms of automation to give us additional coverage across the nation,” he added.
The figures showed its net interest margin – a key measure of profitability for retail banks – improved thanks to lower deposit and wholesale funding costs and a boost from its recently acquired MBNA credit card business.
Customer loans fell 2% to £445 billion in the first quarter from £456 billion in the previous three months, while deposits dropped 1% quarter-on-quarter to £413 billion in a “competitive” market, according to the group.