Lloyds Banking Group (LLOY.L) reported underlying profits in line with expectations on Thursday, keeping first quarter revenues steady and cutting bad debts despite the challenging economic environment.
Lloyds, Britain’s largest mortgage lender, reported underlying pre-tax profit of 2.1 billion pounds in the first quarter of this year, compared with a profit of 2.19 billion pounds a year earlier. That was in line with the 1.99 billion pound average estimate of three analysts surveyed by Reuters.
Chief Executive Officer Antonio Horta-Osório is eliminating thousands of jobs to streamline the business and support a progressive dividend policy, in the final phase of a recovery plan following a 20.5 billion pound taxpayer-funded bailout during the 2007-09 financial crisis.
Britain’s largest retail bank said total income fell 1 percent to 4.4 billion pounds, as higher revenue from its retail bank were offset by lower income in its insurance division. Impairments dropped 6 percent to 149 million pounds even as the Britain’s economy slowed at the start of this year.
“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,” Horta-Osório said in the statement.
Lloyds did not provision any money to repay customers mis-sold loan insurance this quarter, an indication that a scandal that has plagued the bank and sharply reduced profits over recent years is starting to recede.
The bank has been forced to set aside about 16 billion pounds since the financial crisis to repay customers who took out policies to protect borrowers against sickness or redundancy, but were often ineligible to claim.
Lloyds said its net interest margin, the difference between the interest it gets from borrowers and what it pays savers, a key revenue driver, rose to 2.74 percent, due to higher rates for deposits and lower funding costs.
Lloyds took a 790 million pound charge in this quarter for buying back bonds that it says says over the longer term will help lower its funding costs.
Chancellor George Osborne is looking to sell the last remaining government-held shares in Lloyds over the next year after a discounted sale to the general public was postponed earlier this year due to turmoil in global financial markets.
Banking and political sources expect the sale of Lloyds’ shares to resume after the British referendum on membership of the European Union in June, concluding with a larger offer to retail investors. The state has reduced its holding from 43 percent to less than 10 percent, raising over 16 billion pounds.