Lloyds Banking H1 Profit Climbs On Margin Strength, Lifts FY15 Margin View

(RTTNews) - British lender Lloyds Banking Group Plc. (LYG, LLOY.L) Friday reported higher profit in its first half, benefited by increased net interest income and margin as well as lower impairment. Looking ahead, the company lifted its net interest margin forecast.

For the first half, pretax profit climbed 38 percent to 1.19 billion pounds from 863 million pounds in the previous year. Profit attributable to ordinary shareholders increased to 677 million pounds from 574 billion pounds. Earnings per share was 1.0 pence, compared to 0.8 pence.

The latest results included charge of 1.40 billion pounds for PPI and 660 million pounds charge relating to the disposal of TSB. In March, Lloyds agreed to sell its 9.99 percent interest in TSB to Banco de Sabadell SA, a Spain-based financial institution.

Underlying profit increased 15 percent to 4.38 billion pounds from 3.82 billion pounds last year driven by increased income, flat costs and lower impairment charges. Underlying profit excluding TSB grew 19 percent to 4.265 billion pounds. Underlying earnings per share were 4.6 pence, compared to 4.1 pence a year ago.

Total income was 11.81 billion pounds, compared to 14.03 billion pounds last year. Net interest income increased to 5.49 billion pounds from 5.26 billion pounds in the previous year.

On an underlying basis, total income increased 2 percent to 8.968 billion pounds, and net interest income grew 6 percent to 5.72 billion pounds, primarily driven by margin improvement to 2.62 percent from prior year's 2.35 percent.

Impairment was 179 million pounds, a 75 percent improvement from last year's 707 million pounds. Cost: income ratio improved 0.7 percentage points to 48.3 percent.

Further, the company announced an interim dividend of 0.75 pence per share.

Looking ahead, the company now expects net interest margin for the year to be around 2.60 percent. The company previously expected its margin to exceed original guidance of around 2.55 percent.

The company continues to expect other income to be broadly stable in 2015, and full year-cost: income ratio to be lower than full year 2014 ratio of 49.8 percent.

Group Chief Executive António Horta-Osório said, "The continued improvement in financial performance and strong start to the next phase of our strategic journey in the first six months of the year position us well for the future, despite the uncertainties around the economic, regulatory, competitive and political environment."

In London, Lloyds shares were trading at 8534 pence, down 0.68 percent.