Lloyds Bank has started the new month in promising fashion after announcing a sharp rise in underlying profit for the first quarter of the year.
Between January and March underlying pre-tax profits stood at £1.8 billion, the bank said today (May 1st), representing an increase of 22 per cent from the same period last year. This was partially the result of a ten per cent increase in net income from interest payments.
A number of its outgoings also decreased, with impairment charges – charges associated with bad loans – having slumped by 57 per cent year-on-year to a total of £431 million. Costs also fell by a significant five per cent, down to £2.3 billion.
“We made good progress in the first quarter, benefiting from our simple, low-risk, UK-focused retail and commercial banking business model,” said Antónia Horta-Osório, chief executive at the bank, according to the Financial Times.
Interestingly, Lloyds also said that it plans to float a quarter of its TSB business by the end of June. When it was bailed out when the credit crunch began to take its toll in 2008, one of the terms of the deal was that Lloyds had to agree to sell TSB to improve competition.
Taxpayers still own 25 per cent of Lloyds Banking Group after a huge £20.5 billion bailout deal in the depths of the financial crisis, but the chancellor plans to sell this stake on by the end of the year. The news that some shares from the TSB sale will be offered to the public is therefore likely to be welcomed by many prospective investors.
The government has already sold two separate tranches of shares in the bank to reach this point, having reduced its stake from 39 per cent last year.
Six per cent was sold off to institutional investors in the first round, raising £3.2 billion, while a further eight per cent was sold off to raise £4.2 billion as recently as March.
Shares in the bank opened higher this morning as a result of the profit announcement. By 08.01 BST, shares were up 2.5 per cent on their standings at close of play last night.
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