Lloyds raises net interest margin target

City A.M. Reporter
Part-nationalised bank Lloyds slightly raised its 2011 core banking net interest margin target as a result of the company devising a new way of treating its funding costs and capital.

Lloyds said the changes would mean that net interest income within its core banking divisions would increase slightly, while there would be a slight 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 pays to borrow.

Lloyds added it now expected its net interest margin for 2011 to be just above 2.05 per cent - a slight rise from the company's previous target of a 2011 net interest margin of just above two per cent.

In August, Lloyds said that 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.

Britain ended up with a 40.2 per cent stake in Lloyds and an 83 per cent holding in of Royal Bank of Scotland after rescuing both during the credit crisis with taxpayer bailouts, and both companies have been ordered by regulators to sell off a host of assets as payback for their state rescues.