(Alliance News) - Lloyds Banking Group PLC on Wednesday reported a dip in interim profit and income but was pleased with improving margins and efficiency.
In the six months to June 30, Lloyds's pretax profit slipped 7.1% to GBP2.90 billion from GBP3.12 billion the year before. The bank's net interest income declined 3.0% to GBP6.15 billion from GBP6.34 billion, while total net income slipped 1.7% to GBP8.82 billion.
Lloyds's operating costs in the first half improved to GBP3.91 billion from GBP4.02 billion. Restructuring costs were halved to GBP182 million.
The bank has upped its payment protection insurance provisions, however, to GBP650 million from GBP550 million last year.
Lloyds's cost-to-income ratio in the first half was 45.9%, improved from 47.7% a year before. The lender is targeting a cost-to-income ratio in the low 40s by the end of 2020 and hopes for its full-year operating costs to come in below GBP8.00 billion in 2019.
The lender's banking net interest margin in the period was 2.90%, down from 2.93% in the first half last year. The bank's NIM was 2.93% in the half-year to December 31. Lloyds is targeting a NIM of around 2.90% in 2019.
"The group has continued to make strong strategic progress during the first half of 2019 and delivered a good financial performance with market leading efficiency and returns," said Chief Executive Antonio Horta-Osorio.
Lloyds hiked its interim dividend 4.7% to 1.12 pence from 1.07p a year before.
The bank's pro-forma CET1 ratio ended the period down at 14.0% compared to 14.5% the previous year. The ratio was slightly higher compared to the end of 2018.
Lloyds's risk-weighted assets were flat year-on-year at GBP207 billion.
Return on tangible equity in the period was 11.5%, down from the 12.1% achieved in the same period last year.
Loans & advances to customers at June 30 were GBP441 billion, down slightly compared to the year before. Lloyds's open mortgage book at the end of the first half increased slightly to GBP264.9 billion, while customer deposits at the end of the period stood at GBP418 billion, flat on the year before.
"The economy has remained resilient although economic uncertainty has led to some softening in business confidence as well as in international economic indicators. In this environment our strategy continues to be the right one and we are well placed to support our customers and continue to help Britain prosper," said Horta-Osorio.
The lender added: "Our results for the first half of the year continue to demonstrate the resilience of our business model and that our strategy remains the right one in the current environment."
For 2019, Lloyds continues to expect operating costs of less than GBP8 billion with its cost-to-income ratio falling.
Lloyds (LLOY)