Lloyds profits sink as it aims for growth

Lloyds profits sink as it aims for growth

Lloyds Banking Group announced third quarter pre-tax profits of £1.8bn on Thursday, down from the £1.95bn for the same period last year, as it renewed its commitment to more profitable areas of the business.

The bank, which announced a wealth management joint venture with Schroders on Tuesday (23 October), reaffirmed a focus to growing its financial planning and retirement businesses as well as launching a service using open banking rules in November.

"We have been implementing the initiatives which we announced in February as part of our ambitious strategy to transform the group for success in a digital world," Lloyds chief executive, António Horta-Osório said.

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"As planned, our strategic investment has accelerated and is already delivering real benefits to customers whilst operating costs continue to reduce."

The company said it had spent £235m in restructuring the business in the third quarter, taking the total to £612m for the first nine months of the year.

Of this, it had paid £35m in the third quarter to integrate the MBNA and Zurich workplace pensions businesses and to ringfence its non-branch property portfolio.

Last year Lloyds bought Zurich’s UK workplace pensions and savings business, along with assets under administration of more than £15bn and 500,000 customers.

Lloyds is aiming to be a "top three" financial planning business within five years and has already invested in improving its pensions consolidation service, which it claims has reduced completion time and improved conversation rates.

In the nine months to the end of September 2018, the bank said its digital investment programme was already starting to yield results, with productivity improved by its investment in robotics. It estimated 600,000 working hours were saved through this project.

During the quarter, the bank increased its loan book by £2.3bn, taking its total loans to £445bn. It said small business and mid-market loans had grown by £1.9bn in the nine months to the end of September and motor loans by £900m. Its open mortgage book was said to be "in line" with the beginning of 2018.

The bank also said its chief financial officer, George Culmer, would be retiring in the third quarter of 2019.