LONDON (Reuters) -Lloyds Banking Group reported better than expected profits for the first three months of the year on Wednesday, as Britain’s largest mortgage lender largely shrugged off the country’s worsening cost of living crisis.
The bellwether bank posted quarterly pre-tax profits of 1.6 billion pounds ($2.01 billion), down from 1.9 billion pounds reported the previous year but ahead of a 1.4 billion pound average of analyst forecasts compiled by the bank.
Bank finances were lifted last year by the country’s rebound from COVID-19 pandemic lockdowns and the Bank of England ratcheting up interest rates from historic lows.
But soaring inflation – partly fuelled by the economic shockwaves of Russia’s invasion of Ukraine – has threatened the outlook.
“Whilst we are seeing continued recovery from the coronavirus pandemic, the outlook for the UK economy remains uncertain, particularly with regards to the persistency and impact of higher inflation,” the bank’s chief executive Charlie Nunn said.
Lloyds said that despite facing economic uncertainty, its underlying performance meant it could increase its forecast for return on tangible equity and net interest margin, key measures of profitability.
Lloyds now expects banking net interest margin to be 270 basis points this year, up from 260 basis points, and to make a return greater than 11%, compared with a 10% target outlined in February.
The lender’s results contrasted with rival HSBC, which was forced to shelve plans for new stock buybacks in its earnings on Tuesday.
($1 = 0.7945 pounds)
(Reporting by Iain Withers and Lawrence White, Editing by Sinead Cruise)
