Lloyds changes way it reports its margins

PART-NATIONALISED bank Lloyds yesterday changed the way it reports funding costs and capital, resulting in a slightly higher banking net interest margin target for this year but not impacting overall group earnings numbers.

Lloyds said the changes would mean that net interest income within its core banking divisions would increase slightly, while there would be a small reduction for net interest income in other non-banking areas.

The net interest margin represents the gap between what a bank charges for loans and what it pays to borrow.

Lloyds added it now expected the net interest margin at its banking operations to be just above 2.05 per cent in 2011 – a slight rise from the company’s previous target of just above two per cent.

In August, Lloyds said its half-year net interest margin shrank to 2.07 per cent from 2.12 per cent a year earlier as the bank reported an overall interim loss of £3.25bn.