'Strong performance' says CEO
Lloyds Bank profits rise on road to normality
Lloyds Banking Group indicated a return to health by doubling its statutory pre-tax profit to £1.3 billon (2016: £654m) for the three months to March. Underlying profit was almost flat at £2.1bn.
It has set aside £100 million in compensation costs for “economic losses, distress and inconvenience” caused to the victims of the HBOS Reading fraud and a similar sum for retail conduct matters.
As previously announced to the market, the results include an additional £350m PPI provision.
Chief executive Antonio Horta-Osorio said: “In the first three months of this year we have delivered strong financial performance with increased underlying profit, a significant improvement in statutory profit and returns, and strong capital generation.
“These results continue to demonstrate the strength of our customer focused, simple and low risk business model and our ability to respond to a challenging operating environment.
“The UK economy continues to benefit from low unemployment and reduced levels of indebtedness, and asset quality remains strong and is stable across the portfolio.
“We remain committed to supporting the people, businesses and communities in the UK through our Helping Britain Prosper Plan and putting customers first.
“As announced earlier this month, we are determined that the victims of HBOS Reading are fairly, swiftly and appropriately compensated and we have set aside a provision of £100 million in our first quarter results.
“We continue to make good progress against our strategic priorities of creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth; and we remain on track to deliver the group financial targets for 2017, whilst maintaining our longer term guidance.”
The bank announced yesterday that it has appointed Dame Linda Dobbs to carry out an independent review into the HBOS Reading scandal which led to a number of convictions over the mistreatment of clients.
It expects to start making compensation pay-out offers to victims from late May.
Dobbs, a former High Court judge, will assess whether the situation at HBOS was effectively investigated and reported properly at the time by Lloyds, following its takeover of the bank in 2008.
HIGHLIGHTS FOR THE THREE MONTHS ENDED 31 MARCH 2017
Strong underlying performance with significant improvement in statutory profit and returns
· Increase in underlying profit to £2.1 billion with an underlying return on tangible equity of 15.1%
· Positive operating jaws while credit quality remains strong with asset quality ratio of 12 basis points
· Statutory profit before tax increased to £1.3 billion; statutory return on tangible equity of 8.8%
· Strong balance sheet maintained with CET1 ratio of 14.5% (pre dividend accrual)
· Tangible net assets per share increased to 56.5p driven by strong underlying profit