Lloyds Banking Group (LON:LLOY) , which is the first of the UK banks to report first-quarter figures this morning, said it returned to profitability on a combined businesses basis in Q1 2010 as wholesale business impairments slowed. The group said it is delivering good income growth, on a combined businesses basis, excluding last year's impact from liability management transactions.
Lloyds Banking Group is the largest UK retail bank, offering services under various brand names, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical, and Cheltenham and Gloucester. Lloyds is 41% owned by the U.K. government, largely due to losses associated with its acquisition of HBOS. The Group’s main activity is in the UK, although it also operates an international division with a presence in over 40 countries. It is listed on both the London and New York Stock Exchange, and is one of the largest companies within the FTSE 100.
According to the latest update, banking net interest margins are running in line with recent guidance of circa 2% for the full year. Costs continue to be well controlled and remain lower than the equivalent period in 2009. Integration savings are being delivered in line with recent guidance and the Group remains on track to achieve a £2bn run-rate of synergies and other operating efficiencies by the end of 2011. The run rate of impairments has slowed significantly and has continued to perform better than our 2009 preliminary results guidance in both retail and corporate businesses.
Customer deposit gathering has remained robust, with good growth in balances, while lending balances are flat. Asset reductions within the Group's portfolios identified for run-off continue albeit, as expected, at a slower pace than last year. The Group continues to de-risk its funding position, with strong term issuance in the early part of the year while continuing to maintain high levels of liquid assets. Lloyds said it is continuing to see good income growth on a combined businesses basis (excluding the impact of liability management exercises). In particular, margin improvements have more than offset the impact of asset reductions over the last year.
Overall banking margins are trending positively and Lloyds continues to be confident of delivering a circa 2% margin for the full year. Income in the Group's core banking businesses has continued to benefit from higher asset pricing and lower funding costs.…
