It reports higher profit after tax and net income
The Lloyds Banking Group has reported a robust financial performance in the first half of 2023, with strong net income and capital generation.
The group’s statutory profit after tax went up by 94% to £2.9 billion, while net income increased by 11% to £9.2 billion, compared with the second half of 2022.
The gains were, however, partly offset by expected higher operating costs and impairment charge. Operating costs went up by 6% to £4.4 billion and underlying impairment charge grew by 76% to £662 million.
Lloyds, the UK’s biggest mortgage lender, said its asset quality remained resilient and the portfolio was well-positioned in the context of cost-of-living pressures.
Today we’ve published our 2023 half year #LBGResults, showing a robust financial performance.
— Lloyds Banking Group (@LBGplc) July 26, 2023
For a full breakdown visit: https://t.co/NS7ECsI8Kg#LLOY $LYG pic.twitter.com/NdnjjleuNH
“We know that rising interest rates, cost-of-living pressures and an uncertain economic outlook are proving challenging for many people and businesses,” Charlie Nunn (pictured), chief executive at the Lloyds Banking Group, commented on the bank’s H1 2023 financial results. “Guided by our purpose of Helping Britain Prosper, we remain fully focused on proactively supporting our customers and helping them navigate the current environment.”
For the year, the banking group now expects its net interest margin to be greater than 310 basis points, its operating costs to be around £9.1 billion, and its asset quality ratio to be around 30 basis points.
“We continue to make good progress on delivering our strategic initiatives,” Nunn said. “Combined with our franchise resilience, this better positions us to support our customers, both today and in the future.”
John Choong, equity analyst at InvestingReviews.co.uk, meanwhile, remarked that Lloyds’ latest results were “a mixed bag.”
“Net interest income and net interest margin came in slightly better than what analysts were expecting,” Choong noted. “Nonetheless, investor sentiment will be weighed down by the underlying impairment figure, which grew 76%. The uncertainty surrounding mortgage arrears and defaults is tangible in these results.
“Even so, the uptick in deposit outflows wouldn't have helped, either, and will surely ring more alarm bells as loan demand continues to slow as well. Having said that, an average second quarter was to be expected given CFO William Chalmer’s comments on the Q1 earnings call. As such, investors will be encouraged by the lender's outlook, which has been improved for the year.”
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