Lloyds Banking Group has reported a 141% jump in profits for its first full financial quarter since the Government completed its post-bailout stake sale.
The bank, which returned to private hands in May, said profit before tax came in just shy of £2bn in the three months to 30 September compared to £811m in the same period last year.
It credited a “strong financial performance” with net interest income – the amount of money it makes through interest charges – rising 12%.
The bank also cited a lack of any new provisions to cover the cost of past mistakes.
Lloyds did not add to its industry-leading bill to account for the payment protection insurance (PPI) scandal, having taken a £1bn hit in its third quarter last year.
It has cost the bank more than £18bn to date and said it was still receiving more claims than had been anticipated – around 11,000 per week – which it partly attributed to an advertising campaign on a deadline for claims by the City regulator featuring Arnold Schwarzenegger.
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Lloyds chief executive, Antonio Horta-Osorio, said: “In the first nine months of the year we have delivered strong financial performance with increased underlying and statutory profit, a significant improvement in returns and strong capital generation.
“These results highlight the strength of our customer focused, simple and low risk business model and the benefits of our competitive advantage in the UK.”
He said the UK economy remained “resilient” despite pressure on the banking sector to hold more cash in reserve and be more careful on lending.
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Regulators fear the industry is over exposed to levels of unsecured borrowing not seen since the financial crisis – topping £200bn – with many consumers out of their depth.
Lloyds said its credit card book, which includes MBNA, had seen a drop in persistent levels of debt.
It added that higher income across the business would now mitigate regulatory demands for higher capital requirements but it maintained its long term guidance on revenue and profits.
The bank’s return to private hands following its 2008 bailout has not concluded its financial crisis-linked troubles.
Lloyds is currently fighting a claim by almost 6,000 former shareholders that they were misled over the takeover ofHalifax Bank of Scotland.
Its shares were trading 1.5% lower in early FTSE 100 trading on Wednesday.
Neil Wilson, senior market analyst at ETX Capital, said: “Lloyds has been making solid progress but it now faces some headwinds.
“After a strong stretch of profit growth it was definitely the star of the UK banking show, but as we have been flagging there are mounting risks from its growing exposure to unsecured lending at a time when the economy looks more likely to hit the skids than deliver a marked improvement.”
Source: Sky News