Lloyds backs guidance as first-quarter profit rises 46%

(Alliance News) - Lloyds Banking Group PLC on Wednesday said first quarter profit was up in line with improving income, including interest income, while it backed its annual guidance.

In the three months that ended March 31, the Edinburgh-based bank said pretax profit was GBP2.26 billion, up 46% from GBP1.54 billion a year earlier.

Total income was GBP9.31 billion, swinging from a loss of GBP2.11 billion, while net interest income rose 18% to GBP3.43 billion from GBP2.90 billion. Other income swung to GBP5.88 billion from a loss of GBP5.01 billion.

Accounted separately from total income, Lloyds reported a net financial loss regarding insurance and investment contracts of GBP4.50 billion from a positive income of GBP6.03 billion. Accounting for this within total income, Lloyds said it rose 23% to GBP4.81 billion from GBP3.92 billion.

Customer deposits fell by GBP2.2 billion to GBP473.1 billion. This was "including a reduction in Retail current account balances of GBP3.5 billion, partly driven by seasonal customer outflows, including tax payments, higher spend and a more competitive market," Lloyds said, noting it was partially offset by deposit increases in Commercial Banking.

Looking ahead, Lloyds backed annual guidance of a banking net interest margin over 305 basis points, and return on tangible equity of around 13%.

The Edinburgh-based bank said asset quality remained resilient, while the portfolio is "well-positioned" in the context of cost of living pressures

"The group has delivered a solid financial performance in the first quarter of 2023, with strong net income and capital generation, alongside resilient observed asset quality," said Chief Executive Officer Charlie Nunn.

"The macroeconomic outlook remains uncertain. We know that this is challenging for many people. Our purpose driven strategy, alongside our financial strength, means we can continue to support our customers across the country, helping Britain prosper.

"We are also making good progress on our ambitious plans to transform the group. Our experience over the last year reinforces our belief that continued strategic delivery will create a more sustainable business and deliver increased returns for our shareholders in the medium to longer-term."

Lloyds shares were down 0.2% to 47.60 pence each in London on Wednesday morning.

By Greg Rosenvinge, Alliance News reporter

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