2nd May 2019 07:37
LONDON (Alliance News) - Lloyds Banking Group PLC on Thursday reported a mixed first quarter, with profit flat and income slipping, but reaffirmed its 2019 financial targets on its "strong" business performance.
In the first quarter, Lloyds's pretax profit was stable year-on-year at GBP1.60 billion, but net interest income declined.
The bank's net interest income decreased 3.8% to GBP3.08 billion from GBP3.17 billion in the corresponding period the year before. However, total net income increased 2.1% to GBP4.42 billion.
Lloyds banking net interest margin in the period was 2.91%, down from 2.93% in the first quarter last year and down from 2.92% in the previous quarter.
"In the first three months of 2019 we have again delivered a strong business performance with continued strategic progress, increased statutory and underlying profit and strong financial returns. While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model, and in particular our market leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders," said Chief Executive Antonio Horta-Osorio.
The bank's operating costs in the three months to March 31 were down 2.0% to GBP1.96 billion from 2.00 billion. Lloyds restructuring costs in the quarter were reduced by 8.7% to GBP126 million.
Lloyds cost-to-income ratio in the first quarter was 44.7%, down from 47.8% the year before. The lender is targeting a cost-to-income ratio in the low 40s by the end of 2020 and hopes for its full-year operating costs to come in below GBP8.00 billion in 2019.
Lloyds risk-weighted assets decreased 1.4% year-on-year to GBP208 billion but edged up slightly compared to the end of 2018.
The bank's pro-forma CET1 ratio ended the period down at 13.9% compared to 14.1% the previous year. The ratio was flat compared to the end of 2018.
Return on tangible equity in the period was 12.5%, up from the 12.3% achieved in the same period last year and considerably higher than the 7.8% seen in the final quarter of 2018.
Loans & advances to customers at March 31 were GBP441 billion, down slightly compared to the year before. Lloyds' open mortgage book at the end of the first quarter decreased slightly to GBP264.1 billion.
Lloyds' customer deposits at the end of the period stood at GBP417 billion, slightly higher than the year before and broadly flat on the previous quarter.
The lender said its Schroders Personal Wealth joint venture with FTSE 100-listed asset manager Schroders PLC is on track to launch in the second quarter.
The lender added: "We have continued to deliver on our ambitious strategic plan to transform the group for success in a digital world. While Brexit uncertainty persists and continued uncertainty could further impact the economy, given the current strong performance, we are reaffirming all of our financial targets. This includes the net interest margin remaining resilient around 290 basis points, operating costs below GBP8 billion in 2019 and a net asset quality ratio below 30 basis points through the plan. As a result, the group continues to expect a return on tangible equity of 14% to 15% in 2019 and ongoing capital build of 170 to 200 basis points per annum."
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