Lloyds sees bottom-line profits hit by charges
Lloyds Banking Group has revealed charges held back growth in first-quarter bottom-line profits as it warned ongoing Brexit uncertainty could take a further toll on the UK economy.
The high street banking giant reported flat statutory pre-tax profits at £1.6 billion as it revealed a further £100 million charge for the payment protection insurance (PPI) scandal after a surge in complaints ahead of the deadline.
It also booked charges of £126 million for restructuring and another £339 million, including an estimated charge for the exit fee for ending its mammoth contract with asset manager Standard Life Aberdeen (SLA).
On an underlying basis, it reported a better-than-expected 8% rise in underlying profits to £2.2 billion for the three months to March 31.
Despite fears over Brexit uncertainty and its impact on the economy, Lloyds said it remained on track for the full year.
Antonio Horta-Osorio, group chief executive of Lloyds, said: “While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model, and in particular our market-leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders.”
The group said it now does not expect another interest rate rise until next year at the earliest as Brexit worries hold back business spending and the deal outcome remains unclear given the recent six-month delay to the EU departure.
But Lloyds finance chief George Culmer insisted its figures showed consumer demand remaining robust.
The bank declined to break out the charge set aside for the SLA contract break fee.
It comes after a tribunal recently ruled Lloyds did not have the right to end the hefty £100 billion contract with SLA.
Lloyds also remained tight-lipped on whether it plans to launch further share buybacks after regulators on Wednesday allowed the lender to free up around £1 billion in capital.
The Bank of England’s Prudential Regulation Authority (PRA) set Lloyds a lower level of the so-called “systemic risk buffer” – a requirement designed to boost the capital strength of retail banks – a move seen as potentially paving the way for further share buybacks.