British bank profit more than doubles as economy revives

LONDON: British bank Lloyds on Thursday announced that its net profit had more than doubled in the third quarter to £1.6 billion ($2.2 billion), driven by the improved economic outlook.

The bank said it expected an improved net interest margin as well as to claw back money set aside to deal with the cost of the pandemic.

The bank posted an impairment credit of £84 million in the quarter, compared to a £300 million charge linked to virus fallout in the same reporting period last year.

The bank’s net income for the quarter increased by 20 per cent to £4.1 billion.

Its profit for the first nine months increased almost eight-fold year on year to £5.5 billion, as part of a trend seen in the whole of the British banking sector.

The bank said in a statement that this was “based upon improvements to the macroeconomic outlook for the UK, combined with robust credit performance”, adding that its underlying profit before impairment “continues to recover”.

The bank said its average interest-earning banking assets were up, “driven by strong growth” in mortgage sales and the “impact of three quarters of government-backed lending in 2021”, as well as “cost discipline” and a rising net interest margin.

Lloyds is particularly dependent on the state of the British economy because it is primarily a retail bank offering services to individuals and businesses.

The bank’s quarterly results are “again breezing past expectations,” said Richard Hunter, an analyst at Interactive Investor.

“Even before the impairment release, the third quarter underlying profit was 27 per cent higher than the previous quarter, representing some real progress,” he said.

The healthy property market has benefited Lloyds, which saw mortgage sales growth of £2.7 billion in the third quarter.

With Lloyds occupying a “dominant position” in this market, “there will almost certainly be more to come,” Hunter said.

Less positively for the bank, British consumers are “continuing to pay down debt where possible”, the analyst added, however, affecting credit card balances, where the margin is higher.

The bank’s shares rose 1.77 per cent in early trading.