Lloyds Banking Q3 Pre-tax Profit Climbs, But Stock Down

(RTTNews) - Lloyds Banking Group (LLOY.L, LYG), in which the UK government has a stake, Wednesday said its profit before tax for the third quarter climbed 28 percent from the prior year. However, underlying profit slid.

The lender set aside 500 million pounds as Payment protection insurance provision. Last year, it had provided for 900 million pounds.

Lloyds said the expected quarter-on-quarter reduction in Insurance, primarily relating to the bulk annuity transaction in the second quarter, has been accompanied by tougher trading conditions in Commercial Banking and lower income from run-off assets.

Third-quarter statutory profit before tax grew 28 percent to 958 million pounds from last year's 751 million pounds.

Underlying profit was 1.972 billion pounds, in comparison with last year's 2.037 billion pounds.

Total income was 4.237 billion pounds, compared to 4.419 billion pounds in the prior year.

Net interest income rose 1 percent to 2.863 billion pounds, while other income dropped 13 percent to 1.374 billion pounds. Lloyds said other income is expected to recover in the fourth quarter, but for full year, it is now expected to be slightly below 2014.

Impairment was 33 percent lower at 157 million pounds. Banking net interest margin improved 17 basis points to 2.64 percent.

For 2015, net interest margin is now expected to be in line with year-to-date performance of 2.63 percent. This was an upgrade by three basis points.

Lloyds was rescued by the UK government during the financial crisis, with a 20.5 billion pounds funding that gave the government a 43 percent stake in the company. The government reduced its holding later on, and currently has about 11 percent stake.

Earlier this month, the U.K.'s HM Treasury said a retail sale of Lloyds Banking shares would be launched next spring.

The government now plans to fully exit from its Lloyds shareholding in the coming months, and as part of this at least 2 billion pounds of shares will be sold to retail investors.

The stock fell 4.8 percent in early trade to 73.72 pence.