Lloyds earnings beat forecasts despite inflationary threats to UK economy

An ATM at a branch of Lloyds Bank in central London, Britain February 25, 2016. REUTERS/Paul Hackett

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LONDON (Reuters) – Lloyds Banking Group (LLOY.L) on Wednesday reported better-than-expected earnings for the first three months of the year as Britain’s biggest mortgage lender largely ignored the deepening of the country’s cost-of-living crisis.

The leading bank posted quarterly pre-tax profit of £1.6 billion ($2.01 billion), down from £1.9 billion last year but above the bank’s compiled average of £1.4 billion Analyst Forecasts.

Bank finances were boosted last year as the country recovered from the COVID-19 pandemic lockdowns and the Bank of England raised interest rates from historic lows.

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But rising inflation – fueled in part by the economic shockwaves from the Russian invasion of Ukraine – has threatened the outlook. Continue reading

“While we see continued recovery from the coronavirus pandemic, the outlook for the UK economy remains uncertain, particularly with regard to the persistence and impact of higher inflation,” said the bank’s chief executive, Charlie Nunn.

Lloyds said that despite the economic uncertainty, its underlying performance could raise its forecast for return on tangible equity and net interest margin, key metrics for profitability.

Lloyds now expects the net interest margin in the banking sector to be 270 basis points this year, up from 260 basis points, and to return more than 11%, compared to a 10% target set in February.

The lender’s results contrasted with rival HSBC, which was forced to shelve plans for new share buybacks in its earnings on Tuesday. Continue reading

($1 = 0.7945 pounds)

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Reporting by Iain Withers and Lawrence White, Editing by Sinead Cruise

Our standards: The Thomson Reuters Trust Principles.

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