Lloyds Banking Group profits double to £1.3bn despite setting aside £450m for PPI claims and the HBOS scandal

 
Rebecca Smith
Lloyds has announced underlying profit of £2.1bn
Lloyds has announced underlying profit of £2.1bn (Source: Getty)

Lloyds Banking Group has almost doubled its statutory pre-tax profit to £1.3bn for the three months to the end of March, despite a "challenging operating environment".

Shares rose 3.16 per cent to 69.54p in early trading.

Read more: The government has made back the £20.3bn it spent bailing out Lloyds

The figures

Statutory profit before tax rose to £1.3bn, meaning Lloyds nearly doubled its profit in the three months to the end of March; up from £654m for the same period a year before. That was despite setting aside £450m for payment protection insurance mis-selling and the HBOS scandal.

Lloyds announced underlying profit edged up to £2.1bn, beating analyst forecasts.

The bank's cost-income ratio also improved to 47.1 per cent from 47.4 per cent a year ago.

Read more: Lloyds appoints Dame Linda Dobbs to lead probe into HBOS scandal

Why it's interesting

Profit was bolstered by the lack of an £800m bill for the first quarter of last year for buying back complicated high-yield bonds that no longer counted towards the bank's capital buffer. Even so, the bank still had to put aside £350m for PPI in this first quarter, along with £100m to compensate HBOS victims.

Lloyds has been making efforts to shed more light on the HBOS scandal, which ran up losses of £250m for the now collapsed bank. Lloyds boss Antonio Horta-Osorio said again today he was "determined" the victims of the fraud will be "fairly, swiftly and appropriately compensated".

Last week, the government announced it had finally made back the money it spent bailing Lloyds Banking Group out during the financial crisis - nine years after it injected £20.3bn into the lender.

What the company said

Horta-Osorio, said: "These results continue to demonstrate the strength of our customer focused, simple and low risk business model and our ability to respond to a challenging operating environment.

"The UK economy continues to benefit from low unemployment and reduced levels of indebtedness, and asset quality remains strong and is stable across the portfolio."

We continue to make good progress against our strategic priorities of creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth; and we remain on track to deliver the group financial targets for 2017, whilst maintaining our longer term guidance.

Read more: This is Britain's worst bank

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