* Q1 pretax profit falls to 74 million pounds
* Bank abandons 2020 guidance
* 406 million pound tax credit lifts results
* Shares tumble in early trading
(Adds Lloyds spokesman comment)
By Iain Withers and Sinead Cruise
LONDON, April 30 (Reuters) - Lloyds Banking Group's
first quarter pretax profit was all but erased by provisions
against expected bad loans due to the coronavirus pandemic,
although Britain's biggest bank said on Thursday it was well
placed to help with a recovery.
Viewed as a bellwether for the wider British economy as the
country's largest provider of home loans and one of its biggest
business lenders, Lloyds reported pre-tax profit of 74 million
pounds, down from 1.6 billion pounds the previous year.
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.
"Despite the outlook remaining challenging and uncertain, we
are well placed to play our part and help Britain recover from
this crisis," Lloyds Chief Executive Antonio Horta-Osorio said.
The profit was sharply below the 863 million pounds average
of analysts' forecasts compiled by the bank due to a 1.4 billion
pounds ($1.75 billion) loan impairments charge.
Shares in Lloyds were down 9% at 1450 GMT, compared with a
3% fall in the FTSE 100 index.
Lloyds' results would have been even worse but for a tax
credit of 406 million pounds in quarter, which the bank said was
due to lower profits and an uplift from deferred tax assets.
The bank also warned it expects further impairments,
particularly if the British economy shrinks by more than its
base case of 5%. The Office for Budget Responsibility, Britain's
official forecaster, has pencilled in a 13% decline in 2020.
And forecasts on various performance metrics set out in
February, which included an increase in return on equity to
12-13%, were no longer valid, Lloyds said.
Lloyds, which like other lenders scrapped its proposed 2019
dividend payout this month at the behest of Britain's financial
regulator, said its board will decide on any future
distributions at year-end 2020.
"Despite there being no income for investors in the
immediate future, the bank is on an undemanding valuation and
its likely ability to weather a crisis such as this provides
some longer term comfort," Richard Hunter, Head of Markets at
Interactive Investor, said.
CORONAVIRUS SUPPORT
Britain's banks have faced criticism for their slow progress
in supplying 330 billion pounds of state-guaranteed loans to
businesses buckling under a near shutdown of Britain's 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 Lloyds is still lagging 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 shows, while RBS, with a 14% share, has provided 1.4
billion pounds of CBILS loans.
A Lloyds spokesman said the bank had a 19% share of the SME
lending market.
Horta-Osorio told reporters that Lloyds was stepping up its
support for businesses, but said companies preferred other
relief measures such as capital repayment holidays and overdraft
extensions, by a ratio of 10:1.
"You have to give customers what they want," he said, adding
that the launch of a scheme offering loans 100% guaranteed by
the government would help plug a gap for small firms.
($1 = 0.8013 pounds)
(Additional reporting by Lawrence White; Editing by Jane
Merriman and Alexander Smith)
