Bank on track for recovery
Lloyds recovery tainted by hit on sale of TSB to Sabadell
The bank, which owns Bank of Scotland and Halifax, was forced to sell TSB as a condition of receiving state aid. It was floated on the London Stock Exchange last summer and sold to Spanish bank Sabadell in March.
Stripping out the costs associated with the deal underlying profits rose 21% to £2.18 billion and the bank surprised the market by making no provision for payment protection insurance.
The figures showed the bank on track for recovery from the financial crash with the balance sheet strengthening and lending to businesses increasing.
Chief executive Antonio Horta-Osorio said: “We have made a strong start to the next phase of our strategy to become the best bank for customers and shareholders, as we continue to support and benefit from UK economic growth.
“I am pleased with the continued improvement in financial strength and performance in the first quarter and expect our plan to deliver sustainable growth and improved returns.”
Its tier one ration – the key measure of balance sheet reserves – is up 0.6% to 13.4%, well above EU guidance. The bank reported a statutory profit before tax of £1.2 billion.
Net lending to SMEs over the last 12 months is up 4% to £1.1bn in a declining market while £2.2bn was lent to first-time buyers in the first quarter, providing one in four mortgages.
Recent share sales by the Treasury mean the UK government stake has been reduced to 20.95%. The full year cost:income ratio is targeted to be lower than the 2014 ratio of 49.8%.