World Economy

Lloyds Profits Dive

Lloyds Profits Dive
Lloyds Profits Dive

Lloyds Banking Group Plc, Britain’s largest mortgage lender, posted a 15% decline in third-quarter profit as it took a £1 billion ($1.2 billion) charge to compensate customers who were wrongly sold loan insurance.

The bank’s shares fell as much as 3.8% as impairments climbed more than most estimates while an accounting change drove an improvement in capital. Excluding the charge and other one-time items, profit fell 3% to £1.91 billion, the London-based bank said in a statement Wednesday, missing the £2.04 billion average of six estimates compiled by Bloomberg News.

Chief Executive Officer Antonio Horta-Osorio, 52, remains tangled in Britain’s costliest banking scandal as he attempts to navigate record-low interest rates and a potential economic slowdown sparked by the country’s vote to leave the European Union. His bank has now taken more than £17 billion in charges for payment protection insurance over the past five years, more than any other major British lender.

“This would be the last big PPI provision we would expect to take,” Chief Financial Officer George Culmer said on a call with reporters. “Even after this provision, the group continues to be strongly capital generative.”

The shares dropped 3.1% to 53.62 pence in London. Lloyds has fallen 26% this year for the second-worst performance among Britain’s largest banks, behind Royal Bank of Scotland Group Plc. The British government resumed selling its 9.1% stake in Lloyds earlier this month, abandoning a previous plan to hold an offering for individual investors.

The firm’s core Tier 1 capital ratio rose to 13.4% from 13% at the end of June, driven by a gain tied to switching the way it classifies UK sovereign bonds on its balance sheet. The figure is closely watched because Horta-Osorio has pledged to return excess cash above 13% to shareholders.


Add new comment

Read our comment policy before posting your viewpoints