LONDON – Britain’s Lloyds Banking Group <LLOY.L> on Thursday reported a pre-tax profit of 1.8 billion pounds ($2.32 billion) in the third quarter, outperforming analyst forecasts.
Analysts had expected the bank to bring in 1.7 billion pounds, according to a company-compiled average of their estimates.
The lender’s pre-tax profit for the first nine months rose 10 percent year on year to 4.9 billion pounds, while costs fell 3 percent to 6.4 billion pounds. It reaffirmed all its guidance for 2018.
“These results further demonstrate the strength of our business model and the benefits of our low risk, customer focused approach,” Lloyds Chief Executive Antonio Horta-Osorio said in a statement.
Lloyds laid out a new three year strategy in February aimed at digitising its operations and growing its presence outside of its core markets like mortgages, where it has effectively exhausted opportunities for significant growth.
As well as aiming to ramp up its presence in areas like insurance and wealth, the bank said it had grown its lending in two other strategic areas: to small businesses and in higher margin sectors like car finance.
Britain’s biggest retail lender was helped by a growing net interest margin, which was up 8 basis points to 2.93 percent. Net interest margin is a key measure of the profitability of a bank’s lending.
Lloyds’ broad exposure to UK consumers and businesses makes it a bellwether for the British economy. Five months ahead of Brexit – the biggest policy shift in Britain in decades – the bank said its credit quality had not deteriorated.
It also reported a common equity tier one capital ratio of 15.5 percent.
In a separate statement, it said its Chief Financial Officer George Culmer would retire following its interim results in 2019.
The board thanked Culmer for “helping Lloyds navigate its way through the aftermath of the financial crisis” to return to full private ownership in 2017 and for his contribution to reshaping the former state-backed lender’s strategy.
(Reporting by Emma Rumney and Lawrence White; editing by Sinead Cruise)