Lloyds profit tops estimates after setting aside less provisions

LLOYDS Banking Group posted pre-tax profit that beat estimates in the second quarter, as an improved economic outlook allowed the lender to whittle down the amount of money it sets aside for souring loans.

The company set aside £44 million (S$76.1 billion) in provisions for souring loans in the quarter, which was far less than the £323 million average of analyst estimates compiled by Bloomberg. That buoyed pre-tax profits, which also fell less than analysts expected to £1.74 billion in the quarter.

Lloyds, the UK’s biggest mortgage lender, is considered a bellwether for the national economy. With interest rates remaining stubbornly high in recent months, the bank has been under pressure to offer savers better rates on their deposits.

The bank’s net interest margin – a key measure of profitability that shows the difference between what a bank pays out to depositors and collects from loans – slipped 2 basis points to 2.93% in the quarter, which was in line with analysts expectations. BLOOMBERG