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* Q1 pretax profit falls to 74 million pounds
* Bank abandons 2020 guidance
* 406 million pound tax credit lifts results
(Adds detail, background)
By Iain Withers and Sinead Cruise
LONDON, April 30 (Reuters) - Lloyds Banking Group's
pretax profit was all but wiped out in the first quarter, after
it became the latest lender to be hobbled by provisions against
expected bad loans due to the coronavirus pandemic.
Britain's biggest domestic bank on Thursday reported pre-tax
profits of 74 million pounds, down from 1.6 billion pounds the
previous year, hit by a 1.4 billion pounds ($1.75 billion) loan
impairments charge.
The figure was sharply below the 863 million pounds average
of analysts' forecasts compiled by the bank.
Lloyds is viewed as a bellwether for the British economy, as
the country's largest provider of home loans and one of its
biggest backers of businesses.
It abandoned forecasts on various performance metrics it set
out in February, which included an increase its return on equity
to 12 to 13%, saying that guidance was no longer appropriate
given the harsher environment.
"We expect the Group will also experience further
impairments, both in existing and new lending books,
particularly if economic expectations deteriorate further from
the base case," the bank said, adding that the double base-rate
cuts in March would also impact margins adversely.
Lloyds' results would have been even worse but for a tax
credit of 406 million pounds in the period, which the bank said
was due to lower profits and an uplift from deferred tax assets.
Shares were trading down 1.2% at 0712 GMT, compared with a
0.5% gain in the FTSE 100.
CORONAVIRUS SUPPORT
Britain's banks have faced heavy criticism for their slow
progress in supplying 330 billion pounds' worth of
state-guaranteed loans to businesses buckling under the pressure
of a near-shutdown in the UK economy.
Lloyds said it had provided 880,000 loan repayment holidays
across all its product lines and issued 3,752 loans with an
aggregated value of 500 million pounds via the Coronavirus
Business Interruption Loan Scheme (CBILS).
But it is still lagging behind rivals RBS, HSBC
and Barclays, despite being Britain's biggest
provider of loans to small companies.
Lloyds has a 24% market share of relationships with small
business borrowers, data from business insights provider RFi
Group sent to Reuters shows.
Rival RBS, with a 14% share, has provided 1.4 billion pounds
of CBILS loans, nearly three times the value of Lloyds.
Lloyds did however report a 2.7 billion pound increase in
loans and advances to 443.1 billion pounds over the period,
which it said was driven by drawdowns of existing corporate debt
facilities.
HSBC and Barclays have also set aside billions of pounds to
cover an expected spike in bad loans due to the coronavirus
outbreak, with state-backed RBS expected to follow suit on
Friday.
($1 = 0.8013 pounds)
(Additional reporting by Lawrence White. Editing by Jane
Merriman)
