Lloyds profits grow despite 'considerable' uncertainty

Lloyds profits grow despite 'considerable' uncertainty

Lloyds Banking Group has reported growing profits, with the bank pushing ahead with its cost-cutting targets a year earlier than expected.

In its annual results published today (February 20) Lloyds announced a post-tax profit growth of 24 per cent on last year, up from £3.5bn in 2017 to £4.4bn.

Lloyds cut its operating costs from £8.18bn to £8.17bn, but said these costs were on track to be less than £8bn in 2019 - a year ahead of schedule.

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The bank's open mortgage book balances were broadly flat at £267bn, reflecting the company's "continued focus on the trade-off between volume and margin" in what it described as a "highly competitive" market.

Despite "considerable" uncertainty surrounding the UK's departure from the EU, Lloyds chief executive António Horta-Osório said the domestic economy remained resilient. 

He said: "Given our UK focus, our performance is inextricably linked to the health of the UK economy.

"Over 2018, economic performance has remained resilient with record employment and continued GDP growth and, whilst the near-term outlook remains unclear, particularly given the ongoing EU withdrawal negotiations, our strategy will continue to deliver for our customers."

Mr Horta-Osório added: "While the year ahead will bring its own challenges, given the ongoing economic and political uncertainty, I continue to believe that our simple, low risk business model is the right one.

"Our current strategic plan for 2018 to 2020, with continued strong investment, will further improve customer propositions and grow our leading digital bank as part of our multi-channel strategy, while continuing to provide leading and sustainable returns to our shareholders." 

Compared with the previous year Lloyds reduced its payment protection insurance charge by 55 per cent to £750m in 2018, something the bank attributed to its boost in profits. 

Last year's PPI bill included included an additional £200 million charged in the fourth quarter, a cost the bank said was partly driven by an increase in average redress per customer case.

The bank pointed to its wealth management partnership with Schroders as a "key part" of its growth in that market, with plans to become one of the top three financial planning business in the UK within five years.