Taxpayer-backed Lloyds Banking Group saw a threefold rise in profits in the first three months of the year as bad debts fell and it continued to cut costs.
“These figures show that we are making significant progress and are ahead of our plan to transform the group,” said chief executive Antonio Horta-Osorio. “We still have much to do, but there are many positives in this quarter’s results.”
Headline profits jumped from £497 million to £1.48 billion, well ahead of most analysts’ forecasts of £1.1 billion.
For the first time since Horta-Osorio took charge of the bank in early 2011 there is no increase in the quarter for the cost of settling payment protection insurance mis-selling claims.
Bad debt writedowns dropped by 40 per cent to £1 billion in the quarter, while costs were reduced by 6 per cent. The bank said it now expects to save an extra £200 million in costs during this year. Finance director George Culmer said the rate of new claims fell by 28 per cent on the fourth quarter of last year and it had spent another £589 million on compensation. Its total provision is £6.8 billion — the largest of any bank.
After last week’s collapse of the sale of 632 branches to the Co-op, Lloyds said its planned flotation of the newly renamed TSB should take place “sometime in the middle of next year”. The Government still owns 39 per cent of Lloyds following its £20 billion bailout in 2009. Even with today’s 2p rise in the share price to 55.5p this is still well short of the Treasury’s average buying price of 63.1p.
Horta-Osorio said that the timing of any privatisation move was up to the stakeholding body UKFI and the Treasury, and that he had not had discussions with them over any possible share sale recently.