Lloyds Bank profits rise 23% as lender cuts jobs and branches

Shares in the lender edged down on Wednesday morning

The bank recently announced 49 branches would close across the UK (Reuters)

Lloyds Banking Group has reported a 23 per cent increase in profits to £1.6bn in the first quarter of the year, weeks after announcing another round of branch closures and job cuts.

The lender posted a 4 per cent increase in net income for the three months to 31 March, from £4.18bn this time last year to £4.33bn, while earnings per share rose 36 per cent to 1.5p from 1.1p.

The bank’s provision for payment protection insurance payouts was reduced to £90m from £350m in the first quarter of 2017.

“In the first three months of 2018 we have again delivered strong financial performance with increased profits and returns, a significantly reduced gap between underlying and statutory profit and a strong increase in capital. These results continue to demonstrate the strength of our business model,” said chief executive Antonio Horta-Osorio.

“The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth. Asset quality remains strong with no deterioration seen across the portfolio. We expect the economy to continue to perform along these lines during 2018.”

Lloyds has announced a series of branch closures and role reductions in recent months as part of its attempt to improve profitability.

On Wednesday, Mr Horta-Osorio said the bank had made a “strong start to 2018” and had “begun implementing the strategic initiatives which will further digitise the group, enhance customer propositions, maximise our capabilities as an integrated financial service provider and transform the way we work”.

Richard Hunter, head of markets at Interactive Investor, said the numbers “provide much of what any bank should aspire to, with strong growth underpinned by a disciplined and organised balance sheet”.

However, he noted that a rise in impairment provisions, from £127m to £258m, was “slightly troubling given a fairly benign economic backdrop”, and warned: “The ongoing cost of the transformation towards becoming a digitised provider and the inevitable overhang of regulatory requirements could place a drag on growth.”

Shares in the group edged down at the open.