Last checked at 
(Alliance News) - Lloyds Banking Group PLC on Wednesday maintained its annual net interest margin guidance and reported consensus-topping third-quarter profit, though top-line growth fell just shy of loftier expectations.
In the third quarter of 2023, the lender's net income rose 0.7% on-year to GBP4.51 billion from GBP4.48 billion. This was below company-compiled consensus of GBP4.56 billion, however.
Net interest income alone was 1.5% higher at GBP3.44 billion, though this also fell short of consensus of GBP3.45 billion.
Pretax profit more than trebled to GBP1.86 billion from GBP576 million a year earlier, beating consensus of GBP1.82 billion.
Its banking net interest margin improved to 3.08% in the third quarter from 2.98% a year earlier, amid rising interest rates. It was shy of the 3.10% consensus and the 3.14% achieved in the second quarter of the year.
Underlying impairment charges were lower, amounting to GBP187 million compared to GBP668 million.
Excluding those impairment charges, underlying profit was 5.1% lower at GBP2.21 billion from GBP2.33 billion.
"The group continues to perform well. Robust financial performance and strong capital generation in the first nine months of the year was driven by net income growth, cost discipline and resilient asset quality. This performance allows us to reaffirm our 2023 guidance," Chief Executive Charlie Nunn said.
Looking to the rest of 2023, Lloyds backed its aim of a banking net interest margin "greater than" 3.10%. It would top the 2.94% achieved in 2022.
It now expects an asset quality ratio below 30 basis points. It had previously expected this to amount to around 30 basis points. The measure is a loan loss rate, so the lower the better.
Lloyds said deposits, loans and advances declined during the third quarter.
It explained: "Loans and advances to customers reduced GBP2.8 billion to GBP452.1 billion, including a GBP2.5 billion legacy portfolio exit in the first quarter. Balances increased by GBP1.4 billion in the third quarter with growth across a number of businesses.
"Customer deposits of GBP470.3 billion down GBP5.0 billion (1.0%), including a GBP9.4 billion reduction in Retail current accounts, partly offset by a combined GBP5.2 billion increase in Retail savings and Wealth balances. Deposits increased by GBP0.5 billion during the third quarter, given growth in Retail savings."
Lloyds Banking's numbers followed a mixed set of results from Barclays PLC on Tuesday. Barclays had cut its UK net interest margin guidance, leading to investors fretting over the possibility of a similar disappointment at Lloyds and NatWest Group PLC, which reports on Friday.
Lloyds shares fell 2.0% on Tuesday. They gave back another 0.3% to 40.46 pence each in early dealings on Wednesday.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
