1st May 2025 09:09
(Alliance News) - Lloyds Banking Group PLC on Thursday said profit fell in the first quarter, as higher costs and impairments offset an increase in income.
In response, shares in Lloyds Banking Group were down 1.9% at 71.88 pence each in London on Thursday morning. The wider FTSE 100 index was little changed.
The Edinburgh-based bank said pretax profit totalled GBP1.52 billion in the first quarter of 2025, down 6.7% from GBP1.63 billion the previous year.
Underlying profit declined 13% to GBP1.53 billion from GBP1.76 billion, missing GBP1.59 billion market consensus.
Higher net income and reduced volatility were more than offset by higher operating costs and a higher impairment charge, the bank said in a statement.
Underlying net interest income rose 3.5% to GBP3.29 billion in the quarter from GBP3.18 billion a year ago, supporting 3.5% growth in total income to GBP4.39 billion from GBP4.24 billion.
This reflected an improved net interest margin which rose to 3.03% in the quarter from 2.95% a year ago, Lloyds said.
Operating costs increased 6.3% to GBP2.55 billion from GBP2.40 billion reflecting inflationary pressures, planned higher severance costs and business growth costs, partly offset by cost savings.
Chief Executive Charlie Nunn commented: "In the first quarter of 2025, the group delivered sustained strength in financial performance. In particular, net income continues to grow, following the upward trajectory established in the second half of last year. We maintained our cost discipline and asset quality remains resilient."
"We remain confident in the outlook for Lloyds Banking Group and in our 2025 and 2026 guidance," he added.
Lloyds said impairment charges multiplied to GBP309 million in the first quarter from GBP57 million a year before, but it said its portfolio remains "well-positioned with stable and benign credit performance in the quarter".
Underlying loans and advances to customers increased by 3.9% to GBP466.2 billion from GBP448.5 billion a year ago, while customer deposits also grew by 3.9%, to GBP487.7 billion from GBP469.2 billion a year ago.
The return on tangible equity fell to 12.6% from 13.3%. The CET1 capital ratio 13.5% from 13.9%.
For 2025, Lloyds continues to expect underlying net interest income of around GBP13.5 billion, operating costs of round GBP9.7 billion and return on tangible equity of around 13.5%.
In 2024, the bank reported underlying net interest income of GBP12.85 billion, operating costs of GBP9.44 billion and return on tangible equity of 12.3%.
By Jeremy Cutler, Alliance News reporter
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