- Lloyds made a pre-tax profit of £1.86 billion in the three months to September
- Profits rose more than three times from last year’s adjusted £576m
- However, on a nine-month basis, sales rose by over £900m to £13.7bn
Lloyds Banking Group slightly beat profit expectations in the third quarter after impairments fell significantly.
The banking giant posted a pre-tax profit of £1.86 billion in the three months to September, more than triple last year’s £576 million, which was adjusted for accounting changes, and above the £1.8 billion forecast by analysts.
The company has set aside just £187 million in loan loss provisions, compared to £668 million in the corresponding period in 2022 and £419 million in the previous quarter, which the company attributed to “broadly stable credit trends and robust asset quality”.
Good result: Lloyds Banking Group posted a pre-tax profit of £1.86 billion in the three months to September, more than three times the adjusted £576 million last year
Net profit remained relatively stable at £4.5bn, reflecting higher payouts to savers, lower customer deposits and slightly weaker mortgage rates.
However, on a nine-month basis, revenue rose by more than £900m to £13.7bn, despite loan volumes falling following the bank’s exit from an old retail mortgage portfolio.
Thanks in part to the Bank of England’s continued rate hikes, the London-listed group’s net interest margin – the difference between what lenders pay borrowers and savers and a key measure of profitability – totaled 3.15 percent, up 31 percent Basis points previous year.
Combined with a moderate increase in operating costs and falling volatility-related costs, pre-tax profit rose by £2 billion to £5.7 billion in the January-September period.
As a result, the company has maintained its full-year guidance, which calls for a return on tangible equity of over 14 percent and a bank net interest margin of over 310 basis points.
Charlie Nunn, chief executive of Lloyds, said: “The robust financial performance and strong capital generation in the first nine months of the year was driven by net income growth, cost discipline and robust asset quality.”
Lloyds’ results come a day after Barclays reported that the company’s third-quarter profit fell to £1.9 billion, largely due to weaker performance in its investment banking business.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “After Barclays’ mixed results led to a bank sell-off yesterday, Lloyds’ update should provide some reassurance about the sector’s resilience.”
She added: “There are no surprises in today’s update, which should reassure the market and Lloyds appears to be holding on to cash for any opportunities that arise in the coming months.”
Both Barclays and Lloyds have been criticized for closing dozens of high street branches this year as many Britons, particularly older people, rely on them to access financial services.
The former company is expected to close about 180 stores in 2023, while the latter is expected to cut 155 stores and another 75 are slated for closure next year.
Last month, Lloyds announced that 18 Lloyds branches, as well as 15 Halifax locations and two Bank of Scotland locations, would close their doors between January and September 2024.
This is done by the company requiring its employees to report to the office at least two days per week as part of a measure to increase productivity.
Shares in Lloyds Banking Group fell 1 percent, or 0.4 pence, to 40.2 pence in early trading and are down about 14 percent since the start of the year.