Boost For Lloyds Following Q1 Results

Lloyds Banking Group has released its figures for the first financial quarter, showing that profits

April 29, 2022
Boost For Lloyds Following Q1 Results
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Lloyds Banking Group has released its figures for the first financial quarter, showing that profits have fallen by less than had been expected.

The pre-tax profit was reported as £1.6 billion for the first three months of 2022, a 14% drop. However, analysts had predicted that the group would be reporting a larger drop to £1.4 billion.

Part of the improved fortunes of the bank were attributed to higher-than-expected revenue, which had increased by 12% to £4.1 billion, with most analysts predicting a revenue figure of £100 million lower than this.

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Inflation and Interest Rate Changes Take Hold

The improvement in revenue has been attributed to the extra cash from rising interest rates, and from the continued growth of the mortgage side of the business. This is despite the expected impact that surging inflation would have on the banking industry.

But those inflation rises are having some impact – the bank has had to add another £177 million to its reserves which is in part to protect against potential loan losses. It is expected that, with the huge cost of living increases taking effect, more customers will default on loan payments.

Chief financial officer for the bank, William Chalmers, said that 1.2 million Lloyds customers had cancelled subscriptions since last summer, including gym memberships and streaming services, with the cost of food and utilities rising.

Lloyds Banking Group had previously cancelled £360 million of its reserves previously set aside to manage losses due to the COVID-19 pandemic, where it appeared that the economic situation had been improving.

Costs also increased for the bank during the period, rising by 3% to £2.1 billion. The bank attributed this mainly to its ambitious growth strategy and related investments, with a plan to expand in its wealth management and investment bank arms that was announced in February.

Strengthening For The Future

Shares for the group rose by around 2.5% on Wednesday morning following the announcement, with the better-than-expected losses giving the share price a boost. Share prices had been as much as 20% better in the first part of the year, but much of this gain was wiped out following the Russian invasion of Ukraine and the knock-on impact on global finances.

 While the results do reflect the concerns around inflation and the impact on customers’ financial situation, the fact that the numbers were better than analysts had predicted is seen as a positive sign. Not just for Lloyds but for the British banking industry as a whole – with Lloyds being one of the UK’s largest banking groups, its results are often an indicator of the wider market.

And the bank has expanded on its growth strategy – it has revealed that the new wealth management service (aimed at mass affluent customers) and the expansion of its investment bank arm will add another £1.5 billion in revenue by 2026, a potential increase of around 38%.

Andrew Cook
Andrew Cook
Hi, I'm Andrew and I am a news writer for CompareBanks. My main focus is on digital and online banks and looking at the banking landscape is changing within the UK and around the world.

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About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank in...
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