Bank of Scotland owner Lloyds swings back into profit
Bank of Scotland owner Lloyds returned to profit in the third quarter, racing ahead of analysts' predictions as it achieved more than £1 billion before tax.
The lender said it was starting to see an encouraging recovery after it took serious hits from the Covid-19 pandemic, which are likely to cost it more than £4.5bn in impairments this year.
Pre-tax profit hit £1.04bn in the three months ending September 30, up from £50 million in the third quarter in 2019. It was ahead of the approximately £588m forecast by experts, and came on a net income of £3.4bn.
Lloyds was able to better the analysts' prediction due to lower impairment costs. The bank took a £301m impairment in the quarter, more than £400m lower than analysts had predicted.
It now forecasts that impairments for the whole of 2020 will be in the lower end of the £4.5bn to £5.5bn it had predicted earlier this year.
Chief executive Antonio Horta-Osorio said: "Although our performance has clearly been impacted by the pandemic and the associated challenging economic environment, I am pleased that we are now seeing an encouraging business recovery and, with impairments significantly lower, a return to profitability in the third quarter.
"The pandemic has accelerated many trends around ways of working and digital adoption and our long-run investment in digital propositions has positioned the group well to continue to support our customers.
"As a result, the number of digital users continued to increase, the proportion of products sold digitally is rising and customer satisfaction is at record levels. Our digital proposition and focus on technological change will remain a priority as we accelerate our transformation."
John Moore, senior investment manager at Brewin Dolphin, said: “Like Barclays earlier in the week, there are tentative signs of recovery in Lloyds’ results. The bank’s net interest margin has continued to come under pressure, but there are some positives to be taken in relatively low impairment charges, increased capital buffers, and a return to profit, while the bank’s modernisation programme will place it relatively well for the new ways of doing business.
"There is a relatively positive tone to today’s statement, but the next few months could be particularly challenging for Lloyds.”
The lender was earlier this year fined £64m by FCA over mortgage “failures”.
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