Lloyds Bank holds guidance as Q1 profit falls 28% on margin squeeze
Lloyds Bank held annual guidance despite a 28% fall in first-quarter profits due to lower net interest income and higher operating expenses, as competition for mortgages and savings squeezed margins.
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Profit before tax for the first three months of 2024 was £1.63bn, down from £2.2bn a year earlier when higher interest rates saw booming profits in the sector and prompted the government to introduce a surcharge on excess profits. Earnings were also 8% lower quarter on quarter.
Net interest margin – the difference between what a bank makes on savings and loan rates – fell to 2.95% from 3.22%. Underlying net interest income decreased 10% to £3.2bn.
Impairment charges were down significantly to £57m from £243m a year earlier and a credit of £541m in the previous three months. It also beat average forecasts of £280m.
There was also no charge for possible claims against its motor finance business, after already setting aside £450m.
LLoyds also forecast a 1.5% rise in house prices by the end of the year, having previously expected them to fall by 2.2%. It also sees the economy growing 0.3% in most quarters and a drop in inflation to 2.4% – from 3.2% in March – resulting in a fall in interest rates to 4.5% by December and the Bank of England to cut rates three times in 2024, starting in the middle of the year.
Reporting by Frank Prenesti for Sharecast.com