CompaniesApr 30 2013

Lloyds’ profit boosted by £400m SJP share sale

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Lloyds Banking Group has posted a £1.5bn profit before tax for the first three months of this year, which it attributed in part to the sale of St James’s Place shares which raised £394m, as well as continued improvements in cost efficiency.

In its Q1 results, published today (30 April), the group delivered a substantial increase profit before tax to £2.04bn, compared to £280m in the first quarter of last year, and an underlying profit before tax of £1.48bn, compared to £497m in Q1 2012.

The growth was driven by increased income, reduced costs and a further substantial reduction in impairment charges, the bank said.

A 3 per cent increase in underlying income to £4.9bn was principally driven by a £394m gain relating to the sale of shares in St. James’s Place.

The group said it expects total costs to be around £9.6bn in the full year 2013, down from its previous guidance of £9.8bn, as a result of the partial disposal of the St. James’s Place holding and further cost savings.

In addition, assuming a an initial public offering for the 630-branch strong ‘Verde’ unit in mid 2014, plans for which were announced last week, Lloyds now expect costs to be around £9.2bn for the full year 2014.

This represents a reduction of around £2bn since 2010 and around £1bn more than the original strategic review target, it added.

Lloyds also said that no further payment protection insurance provision has been made in this quarter, flagging up that the volume of PPI complaints has continued to fall in line with its expectations.

PPI complaints are now at approximately 15,000, down 28 per cent on the last quarter and less than half the level experienced in the second quarter of 2012.

Total costs incurred in the first quarter were £586m, including approximately £180m of related administration costs.

Costs in the first half will now be marginally higher than expected due to the acceleration of the settlement of cases currently held with the Financial Ombudsman Service and one off VAT payments.

António Horta-Osório, group chief executive, said: “We made substantial progress again in the first quarter. Underlying and statutory profits improved significantly, and our core loan book returned to growth earlier than expected.

“Margin increased, and costs and impairments continued to fall rapidly, with this progress underpinned by a further strengthening of our balance sheet.

“We are delivering real benefits for customers, colleagues and shareholders by investing behind our simple, UK customer-focused retail and commercial banking model, and are now further ahead in our plan to transform the group, as reflected in the enhanced guidance for costs and capital we are giving today.”