Lloyds to cut 3,000 jobs in push to trim costs after Brexit vote

[LONDON] Lloyds Banking Group Plc will eliminate an additional 3,000 jobs and a further £400 million (S$712.9 million) of annual expenses, as the UK's largest mortgage lender attempts to stave off a Brexit-induced earnings slump.

Pretax profit, excluding one-time items, fell to £4.16 billion in the first half of the year, from £4.27 billion a year ago, the London-based bank said in a statement Thursday.That beat the £4.06 billion average estimate of seven analysts surveyed by Bloomberg News.

A potential economic slowdown in the wake of Britain's vote to leave the European Union a month ago is heaping pressure on chief executive officer Antonio Horta-Osorio to deepen cost-cutting to boost earnings.

Slashing expenses will help counter any reduction in customer demand for loans and ease a squeeze on profit margins as the Bank of England considers reducing its key interest rate.

Lloyds has shed about 7,300 employees out of 9,000 it planned to remove by 2017. The company in February said it wouldn't reach its cost-to-income ratio target of 45 per cent until 2019, two years later than planned, because of low interest rates.

The net interest margin, the difference between income from lending and the cost of funding, rose to 2.74 per cent, from 2.62 per cent a year earlier.

Lloyds has fallen about 25 per cent this year in London trading, having plunged after Britain's vote to leave the EU. Uncertainty over Europe and the appointment of a new chancellor has cast doubts over the government's earlier plans to sell its remaining 9.1 per cent stake in Lloyds by the end of March.

The shares remain below the 73.6 pence average price the UK paid in its £20.3 billion bailout of the bank at the height of the financial crisis.

BLOOMBERG