Lloyds Q1 Profit Falls, But Underlying Profit Rises

(RTTNews) - British banking major Lloyds Banking Group Plc (LYG, LLOY.L) Thursday reported a fall in the first-quarter profit, but underlying profit climbed 22 percent driven by net interest income in its key markets as well as a reduction in costs and impairment charges. The company said it is well positioned to make further progress in the remainder of 2014.

Group Chief Executive António Horta-Osório said, "We made good progress in the first quarter benefiting from our simple, low risk, UK focused retail and commercial banking business model."

In an interim management statement, the company said its profit before tax for the first quarter fell to 1.37 billion pounds from 2.04 billion pounds in the previous year.

Profit attributable to equity shareholders dropped to 1.15 billion pounds or 1.6 pence per share from 1.53 billion pounds or 2.2 pence per share last year.

Meanwhile, Group underlying profit for the quarter increased 22 percent to 1.80 billion pounds ($3.03 billion). The growth was 73 percent excluding the effects of St. James's Place.

Total income for the quarter plunged to 7.56 billion pounds from 18.07 billion pounds in the year-ago quarter.

Total underlying income decreased 7 percent, to 4.53 billion pounds, mainly helped by effect of disposals completed in 2013. Excluding St. James's Place effects, total underlying income increased 3 per cent.

On December 9, 2013, Lloyds had announced its plans to sell its remaining 21 percent stake in wealth manager St. James's Place plc (STJ.L) as part of the company's efforts to focus on its core UK retail and commercial banking operations.

However, net interest income surged to 2.72 billion pounds from 457 million pounds a year earlier. Net trading income fell to 1.70 billion pounds from 12.89 billion pounds in the same quarter last year.

Costs were down 5 percent to 2.30 billion pounds, and impairment charge fell 57 percent to 431 million pounds, with improved performance across all main lending portfolios and in the run-off portfolio, the company said.

Asset quality ratio improved 45 basis points to 0.35 percent. Citing its strong performance in the first quarter, the company raised its full-year 2014 net interest margin guidance by around 10 basis points to about 2.40 percent.

For 2014, Lloyds now expects asset quality ratio to reduce to around 45 basis points, against its previous expectation of around 50 basis points.

LLOY.L is currently trading at 78.13 pence, up 2.77 pence or 3.67 percent, on a volume of 27.20 million shares.