Lloyds Banking Group has revealed that its impairment charge for the first quarter of 2015 has fallen 59 per cent to £177m, compared to a year ago.
Group chief executive António Horta-Osório said the improvement reflects effective risk management, a reduction in the size of the run-off portfolio, improving economic conditions and the continued low interest rate environment.
The bank’s trading update for the three months to March 31 2015 also shows that impaired loans as a percentage of advances fell from 2.9 per cent at December 31 2014 to 2.8 per cent, driven by reductions within both the continuing and the run-off portfolios.
The update also shows that profit after tax for this period fell 19 per cent – to £944m from £1.16bn a year ago.
However the group’s underlying profit, (often seen as a more accurate yardstick as it excludes one-off items), was £2.2bn – an increase of 21 per cent on the first quarter of 2014.
Horta-Osório said: “I am confident that the successful delivery of our strategy through our simple, low risk, customer-focused, UK retail and commercial banking business model will enable us to become the best bank for customers, and deliver sustainable returns for shareholders.
“It also remains our intention to pay an interim and a final dividend for 2015.”
He added: “In October 2014 we outlined three strategic priorities to take us through to the end of 2017: creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth.
“On creating the best customer experience, we continue to invest in our customer propositions including new digital initiatives such as Halifax Car Plan Extra, which allows customers to access a range of car financing options online.
“In addition, customers can now apply for a new credit card using a mobile device and youth customers are able to manage their accounts online.”
The group has seen particular growth in its UK consumer finance space, where lending increased 17 per cent during the past 12 months.
The update also shows that Lloyds issued net lending of £1.1bn to SMEs during the past 12 months, which is up four per cent in what it described as “a declining market”.
By Marcel LeGouais