Lloyds Bank profits up to almost £2bn as PPI costs recede

The bank's third quarter profits are 141 per cent higher than the same period last year

Lloyds is seen as a bellweather for the UK's economy (Reuters)

Lloyds Bank on Wednesday reported a lower-than-expected pre-tax profit of £1.95bn in the third quarter, falling just shy of analyst expectations after posting its highest profit for eight years in the first half of 2017.

The bank’s statutory profit before tax was up from £811m a year ago, but just missed the £2.002bn that analysts had forecast on average, according to Thomson Reuters data.

Britain’s biggest retail bank said it would improve the rate at which it generates capital to 2.25 to 2.4 percentage points a year by the end of 2017, a sign of its increasing profitability.

Chief executive Antonio Horta-Osorio said the results showed the strength of the bank’s low-risk business model and its competitive advantage in the UK.

“Asset quality remains strong, reflecting our prudent approach to risk, while the UK economy remains resilient,” he said.

Lloyds avoided taking fresh provisions for misconduct charges such as the mis-selling of payment protection insurance (PPI) - what has become Britain’s costliest consumer banking scandal.

The bank added another £700m of provisions for PPI mis-selling compensation in July. However it said that there has been a rise in claims for compensation since Britain’s financial watchdog launched a new publicity campaign on the issue in August.

Lloyds, seen as a bellwether for the British economy, said its net interest margin - the difference between the interest it gets from borrowers and what it pays savers, a key revenue driver - had widened to 2.85 per cent in the first nine months of the year.

Reuters