Lloyds, Britain’s biggest mortgage lender, said profit jumped almost threefold in the first quarter as impairments for souring loans dropped by more than analysts had estimated.
Pretax profit before exceptional items rose to £1.48 billion (€1.75 billion) from £497 million in the year- earlier period, beating the £1.03 billion median estimate of nine analysts .
Provisions fell 40 per cent to £1 billion, beating the £1.1 billion median analyst estimate, the London-based bank said in a statement today.
“We delivered a significantly improved” performance, chief financial officer George Culmer told reporters on a conference call today.
“The group’s core business is strongly capital generative. Our transformation is ahead of schedule.”
Chief executive officer Horta-Osorio’s attempts to return the 39 per cent government-owned bank to full-year profit have been hampered by more than £12.1 billion of losses tied to the collapse of the Irish real estate market and the spiraling cost of compensating clients who were sold payment-protections insurance they didn’t need.
The lender made no additional provision to the £6.8 billion it’s already set aside for PPI redress.
The lender expects a “substantially reduced” impairment charge for 2013 and plans to make a further £200 million of cost-cuts this year, the lender said.
Lloyds rose 1.1 per cent to 53.50 pence in London trading yesterday, valuing the lender at about £38 billion.
The stock, which has climbed 12 per cent this year, still trades for less than the 61 pence the government paid for its holding when it bailed out Lloyds in 2008 following its takeover of HBOS.
The bank hasn’t paid a dividend since its bailout and didn’t disclose any plans today to resume the payments.
Lloyds’s net interest margin, the difference between the bank’s income from lending and its cost of funding, climbed to 1.96 per cent in the period from 1.95 per cent a year earlier.
While that was below the bank’s target of 1.98 per cent for 2013, the lender said today it still expects to meet that goal this year.
Bloomberg
