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LONDON (Alliance News) - Lloyds Banking Group PLC Friday upped its guidance for 2015 and said its underlying performance in the first three months of the 2015 was strong as first-quarter pretax profit fell.
Led by Chief Executive António Horta-Osório, Lloyds has sold off assets, exited international operations and focused on the UK, where the bank expects GDP growth of between 2.5% to 3.0% this year.
The group's gradual return to full private ownership had been given a boost when the bank resumed dividends at a token 0.75 pence per share for 2014, as its pretax profit jumped to GBP1.8 billion from GBP415 million. The taxpayer's stake in the bank has come down to 20.95%, having been as high as 43% after a bailout in the midst of the global financial crisis of 2008-09.
Lloyds said a GBP660 million net charge related to the disposal of its stake in TSB Banking Group played a big part in causing the group's first-quarter pretax profit to fall to GBP1.21 billion from GBP1.80 billion.
On an underlying basis, which strips out costs related to operating and selling TSB and other provisions, first-quarter profit increased to GBP2.18 billion from GBP1.80 billion.
Underlying net interest income, the difference between interest received on loans and that paid out to savers, increased to GBP3.02 billion from GBP2.8 billion. Underlying income not relating to interest rates fell to GBP1.62 billion from GBP1.72 billion. Underlying costs fell to GBP2.29 billion from GBP2.30 billion.
Underling impairment charges for bad or non-performing loans fell to GBP177 million from GBP431 million.
"I am confident that the successful delivery of our strategy through our simple, low risk, customer focused, UK retail and commercial banking business model will enable us to become the best bank for customers and deliver strong and sustainable returns for shareholders. It also remains our intention to pay an interim and a final dividend for 2015," Horta-Osório said in a statement.
The group improved its guidance for net interest margin in 2015 and said it expects a key measure of the quality of the loans it makes to customers will improve by more than previously guided.
Lloyds shares were up 3.4% at 79.99 pence on Friday morning, the top FTSE 100 gainer.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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