Lloyds Lowers PPI Costs But Impairments Rise -- Earnings Review
April 25 2018 - 9:46AM
Dow Jones News
By Adam Clark
Lloyds Banking Group PLC (LLOY.LN) reported first-quarter
earnings on Wednesday. Shares were down 2% in the afternoon. Here's
what we watched:
PROFIT: Lloyds reported underlying profit of 2.00 billion pounds
($2.79 billion), slightly behind forecasts from UBS predicting
$2.08 billion.
After restructuring charges, provisions for payment protection
insurance claims and other items, pretax profit came to GBP1.60
billion, up from GBP1.30 billion the prior year.
REVENUE: Lloyds had total income for the quarter of GBP4.58
billion, beating a UBS forecast of GBP4.51 billion.
PPI: Lloyds booked a further GBP90 million provision for claims
over mis-sold payment protection insurance, down from GBP350
million the prior quarter. Hargreaves Lansdown said Lloyds will be
a key beneficiary of lower PPI claims as the August 2019 deadline
looms, having already spent nearly GBP19 billion on the
long-running scandal, but said the lender may still book further
costs.
PROFIT GAP: Lower PPI charges helped Lloyds partly narrow the
gap between its underlying and post-tax profit for the quarter, at
GBP2 billion and GBP1.14 billion respectively. The prior year,
underlying profit of GBP2.08 billion contrasted with a net profit
of GBP890 million. However, restructuring, volatility and
impairment costs continued to weigh.
IMPAIRMENTS: Lloyds booked GBP258 million in impairment costs
for the period, more than double the amount recorded a year
earlier. Yet the lender said that it hasn't seen any deterioration
in asset quality, and that the U.K. economy continues to be
resilient.
Davy said it takes a "more cautious" view of the bank's asset
quality, modeling total charges of 35 basis points for the full
year, against Lloyds's forecast of less than 30 basis points.
Write to Adam Clark at adam.clark@dowjones.com;
@AdamDowJones
(END) Dow Jones Newswires
April 25, 2018 09:31 ET (13:31 GMT)
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