28th Oct 2015 07:22
LONDON (Alliance News) - Lloyds Banking Group PLC on Wednesday reported higher third-quarter pretax profit, even as it booked a further GBP500 million in relation to compensating customers who were mis-sold insurance products in the past.
Pretax profit rose to GBP958 million in the quarter to September 30, compared with GBP751 million in the corresponding three months the prior year. Underlying profit, which excludes charges taken on asset sales and provisions for payment protection insurance claims, slipped to GBP1.97 billion from GBP2.04 billion.
Net interest income, essentially the difference between the interest a bank receives from borrowers and pays to savers, rose to GBP2.86 billion from GBP2.84 billion, while costs were down to GBP2.11 billion from GBP2.15 billion. Impairment charges taken on bad loans fell to GBP157 million from GBP236 million.
The new GBP500 million charge for payment protection insurance, which was meant to protect policyholders repay debt in the event of illness, redundancy or death but was widely mis-sold, means Lloyds has now set aside GBP13.9 billion over the scandal.
Meanwhile, the bank updated its guidance for 2015. It now expects its net interest margin, a key driver of profitability, to be in line with year-to-date performance of 2.63%, a small improvement from the 2.60% previously guided. Lloyds improved also the outlook for its asset quality ratio - a measure of impairments for bad loans as a percentage of average loans to customers - which is now expected to be lower than 15 basis points for the full year, against previous guidance of 15 basis points.
However, guidance for other income, meaning income not generated from interest payments, is now expected to be "slightly below" that achieved in 2014.
By Samuel Agini; [email protected]; @samuelagini
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