Lloyds First-half Profit Falls, Underlying Profit Up

(RTTNews) - British banking major Lloyds Banking Group Plc (LYG, LLOY.L) Thursday reported a sharp fall in first-half profit, reflecting legacy charges, including 600 million pounds of further provision for Payment Protection Insurance or PPI. Underlying profit climbed from last year.

Looking ahead, the firm expects full year 2014 statutory pre-tax profit to be significantly ahead of the first half.

António Horta-Osório, Group chief executive said, "In the first half of 2014, we continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity...As a result, we substantially improved our underlying financial performance and delivered a statutory profit, despite further charges for legacy issues."

For the first half, the company's pretax profit fell to 863 million pounds from 2.13 billion pounds in the previous year, which included charge for legacy issues.

Legacy charges included a further provision for Payment Protection Insurance or PPI, of 600 million pounds, and a 226 million pounds charge related to settlement of LIBOR and BBA repo rate issues.

Profit attributable to ordinary shareholders decreased to 574 million pounds from 1.56 billion pounds, with earnings per share declining to 0.8 pence from 2.2 pence per share reported last year.

Underlying profit increased 32 percent to 3.82 billion pounds from 2.90 billion pounds a year ago. Excluding the effect of disposal of its shares in St. James's Place in 2013, underlying profit was up 58 percent.

Total income fell to 14.03 billion pounds from 22.07 billion pounds in the same period last year.

Net interest income climbed to 5.26 billion pounds from 3.27 billion pounds in the preceding year. Meanwhile, net trading income was 4.59 billion pounds, down from 11.01 billion pounds a year ago.

Regulatory provisions for the period climbed to 1.10 billion pounds from 575 million pounds in the preceding year.

Underlying costs decreased 2 per cent to 4.68 billion pounds, and impairment charges were down 58 percent to 758 million pounds.

Fully loaded Basel III leverage ratio was 4.5 percent, compared to 4.5 percent pro forma, as at March 31, 2014. Fully loaded common equity tier 1 ratio increased to 11.1 percent from 10.3 percent pro forma at the end of 2013.

In London, the shares are currently trading at 74.37 pence, down 2.67 percent.