Lloyds smashed quarterly profit forecasts

[LONDON] Lloyds Banking Group smashed quarterly profit forecasts and freed up some cash set aside to cover bad loans, ending CEO António Horta-Osório's decade in charge on a high as Britain's pandemic-hit economy shows signs of recovery.

Britain's biggest domestic lender said on Wednesday it made £1.9 billion (S$3.49 billion) of pretax profit in the first three months of the year, comfortably ahead of analysts' forecasts and the £74 million reported a year earlier.

The results showed further signs of how government measures such as job support schemes have pushed back economic pain from the pandemic, with banks' loan books still holding firm.

"We have started to see positive signs in the UK, including stronger economic data, and the successful progress of the vaccine rollout," Mr Horta-Osório told reporters after his final earnings report at Lloyds.

The bank's profits were boosted by the release of £459 million that had been set aside for expected bad loans.

It had been forecast to book more charges to cover soured debts.

Lloyds' pandemic provisions to date still stand at over £3 billion.

Banks across Europe including HSBC, Deutsche Bank and Santander have reported better than expected earnings this week, despite ongoing concerns about further Covid-19 waves.

Like HSBC, Lloyds said the economic outlook in Britain now looked better than it had initially feared, leading to the provisions release and improved guidance for the year.

Lloyds said return on tangible equity was now expected to be 8-10 per cent this year, while net interest margin would be above 2.45 per cent.

Costs would be trimmed below £7.5 billion, it said.

Mr Horta-Osório is leaving Lloyds to become chairman of crisis-hit Swiss bank Credit Suisse, with his appointment expected to be confirmed at an investor meeting on Friday. HSBC executive Charlie Nunn is set to join Lloyds as CEO in August.

REUTERS