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(Alliance News) - Lloyds Banking Group PLC raised its full year guidance and restored its payout on Thursday, after reporting improved second quarter results and "solid" first-half performance.
Shares in Lloyds on Thursday morning traded up 0.7% at 47.09 pence each in London.
In the six months that ended June 30, Lloyds reported a swing to a GBP3.91 billion pretax profit from a GBP602 million loss a year earlier.
The Edinburgh-based lender's net income rose 2.0% to GBP7.56 billion from GBP7.41 billion. Net interest margin was 2.5%, which it guided for the rest of 2021 as well.
Lloyds was boosted by an impairment credit of GBP656 million in the first half, following a GBP3.82 billion hit a year earlier.
The bank resumed interim dividends by declaring a 0.67 pence per share payout, having not made on in the first half of 2020. The dividend is 18% higher than its 0.57p payout for the second half of 2020.
"During the first six months of 2021, the group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK," said interim Chief Executive William Chalmers.
After its robust first half performance and an improved economic outlook in the UK, Lloyds has decided to raise its full-year guidance.
The lender said it expects its full-year net interest margin to be around 250 basis points. Its net asset quality ratio is not guided to be under 10 basis points.
Return on tangible equity is expected to be around 10% for 2021.
The bank anticipates operating costs of GBP7.6 billion in the year, while risk-weighted assets are predicted to be below GBP200 billion.
In addition, Lloyds announced it will acquire investment and retirement platform Embark Group for GBP390 million.
The lender said Embark will enhance its Wealth proposition by allowing it to address the mass market and self-directed Wealth market segment.
The acquisition also strengthen Lloyds' retirement offering, allowing it to: "re-platform its pensions and retirement proposition, delivering a market-leading platform for intermediaries."
Embark, which will become part of Scottish Widows, brings GBP35 billion in assets under administration for 410,000 consumer clients. It has seven UK offices - in London, Bolton, Dundee, Edinburgh, Leeds, Leicester and Swindon - and includes the brands Advance, Horizon, Stocktrade, Vested and The Adviser Centre.
The purchase will have a 30 basis points impact on Lloyds' group CET1 ratio, which sat at 16.7% at the end of the first half.
The sale price of GBP390 million represents around a 63% internal rate of return on investment for Embark shareholder Chrysalis Investments Ltd.
At July 6, Embark represented around 5% of Chrysalis' net asset value, the company said.
The London-based trust Chrysalis said existing Embark shareholders will retain the company's Rowanmoor SIPP and SSAS administration businesses.
"The final [internal rate of return] on the investment to be determined by the future performance and capital requirements of Rowanmoor," Chrysalis added.
Co-portfolio Managers Richard Watts and Nick Williamson said sale returns: "Will be recycled to fund our exciting pipeline of investment opportunities."
By Scarlett Butler; scarlettbutler@alliancenews.com
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