Lloyds Q3 Underlying Profit Climbs, Lifts FY13 Margin View

(RTTNews) - British bank Lloyds Banking Group Plc (LYG, LLOY.L) reported Tuesday a wider loss in its third quarter on charges, while underlying profit climbed from last year with higher margin and cost control. Further, the company lifted its forecast for fiscal 2013 net interest margin.

For the third quarter, pre-tax loss was 440 million pounds, compared to last year's loss of 151 million pounds. After-tax loss was 1.30 billion pounds or 1.8 pence per share, compared to loss of 374 million pounds or 0.6 pence per share a year ago. The third-quarter results included an additional charge for legacy PPI business of 750 million pounds and 626 million pounds of losses arising from capital accretive asset sales.

Underlying profit in the quarter was 1.52 billion pounds, compared to last year's 831 million pounds. Core underlying profit grew 9 percent to 1.85 billion pounds, while non-core underlying loss was 329 million pounds, narrower than prior year's loss of 870 million pounds.

The company attributed the growth in underlying results to higher margin and its continued strong control of cost and risk. The company noted that total costs declined 5 percent, and impairment charges plunged 47 percent from last year.

Total underlying income dropped 1 percent to 4.56 billion pounds as a 3 percent increase in core underlying income was more than offset by a 52 percent plunge in non-core results.

In the quarter, net interest income was 2.76 billion pounds, an increase of 7 percent from last year, with higher core results. Net interest margin was 2.17 percent in the third quarter, 24 basis points higher than last year's 1.93 percent.

Group Chief Executive António Horta-Osório said, "I am pleased that the progress we have made enabled the UK government to begin the process of returning the Group to full private ownership, and importantly, getting taxpayer's money back at a profit."

In line with its UK-focused strategy, the company said it continues to reshape the business and reduce international presence, and has now exited, or announced the exit from, 21 countries. The company said it has met target to be operating in 10 countries or fewer by the end of 2014, more than a year ahead of plan.

Looking ahead, Lloyds now expects full year 2013 net interest margin to be 2.11 percent, compared to previous forecast of close to 2.10 percent. The company also expects to continue to grow core loan book in remainder of the year.

"We are actively supporting sustainable growth in the UK economy through the focused range of products and the services we provide to our business and personal customers, as well as through the partnerships we have built with industry and government," the company said.

LLOY.L is currently down 3.1 percent in early trade at 77.10 pence.