- POSTED: 01 May 2014 17:26
Britain's bailed-out Lloyds Banking Group said Thursday that underlying profits improved in the first quarter, boosted by falling impairments, cost-cutting and the broader economic recovery.
LONDON: Britain's bailed-out Lloyds Banking Group said Thursday that underlying profits improved in the first quarter, boosted by falling impairments, cost-cutting and the broader economic recovery.
Adjusted pre-tax profit -- stripping out one-off costs and provisions -- jumped 22 per cent to £1.8 billion ($3.0 billion, 2.2 billion euros) in the three months to the end of March, compared with a year earlier, LBG said in a results statement.
The lender, which is 25 per cent owned by the taxpayer, added that impairments tumbled by 57 per cent in the reporting period, while total costs fell five per cent.
"We are supporting and benefiting from the UK economic recovery and are delivering better underlying profitability as well as improved returns for shareholders, from a stronger, lower risk balance sheet," said Chief Executive Antonio Horta-Osorio.
He noted that the group's turnaround strategy had enabled the British government to further reduce its stake in the state-rescued lender.
The bank also confirmed that it expected to apply in the second half to restart shareholder dividends.
Lloyds moved closer to the private sector last month when the government sold another tranche of shares, cutting its stake to 24.9 per cent from 32.7 per cent.
"Our simple, UK focused, low risk and low cost model is founded on creating value for customers and helping Britain prosper, and is well positioned to support and benefit from continued recovery in the UK economy and to make further progress in the remainder of 2014," Horta-Osorio said Thursday.
"Our priority is now moving from reshaping and strengthening the group, to further simplifying it and maximising our growth potential, to ensure that we continue to create sustainable value for both our customers and our shareholders."
LBG added that net profit, or earnings after taxation, sank by 24.7 per cent to £1.15 billion in the quarter. That compared with £1.53 billion in the same period of 2013, when it registered a £776-million gain from selling government securities.
The comparison was also affected by the sale of a stake in asset management group St James's Place.
Britain had pumped £20 billion of state money into LBG at the top of the 2008 global financial crisis. Lloyds Banking Group was created by a merger of Lloyds TSB and rival British lender HBOS.
However, HBOS was saddled with high-risk property investments, and LBG subsequently received the vast state bailout.
Lloyds added Thursday that it would press ahead with a stock market flotation of TSB in the summer, subject to regulatory approval and market conditions, and will seek to sell a minimum of 25 per cent of the business.
As part of the group's turnaround strategy, and in order to meet European Union state aid rules, Lloyds relaunched TSB as a standalone lender last year.
The group has rebranded more than 600 British branches, calling them TSB, after the collapse of a deal to sell them to the crisis-hit Co-operative Bank.
TSB was a familiar part of Britain's banking landscape until Lloyds snapped it up 18 years ago.