Shares in Lloyds Bank (LLOY) are pushing up 2% to 58p this morning against the negative market backdrop thanks to forecast-beating results.
Third-quarter pre-tax earnings topped expectations at £1.82bn thanks to higher income from non-banking activities such as credit cards, insurance and wealth management.
According to a consensus compiled by the bank, analysts were estimating pre-tax profits of £1.7bn compared with almost £2bn last year.
Net interest income in the core banking business was virtually flat on last year’s third quarter at £3.2bn. The net interest margin was also flat at 2.9% as a lower cost of deposits was offset by continued pressure on loan rates due to competition.
As with Barclays, the total loans and deposits at Lloyds are almost unchanged although there has been a slight pick-up in motor finance on one hand and commercial deposits on the other as companies stash away their surplus cash.
SOLID CAPITAL RATIOS BUT NO BUYBACK
Asset quality is still good with just 0.22% of loans considered bad or doubtful and there has been no deterioration in credit risk over the year.
Total costs were flat on the same quarter last year so the bank’s cost-income ratio is still exemplary at under 45%, the lowest of the three banks to report this week.
Its capital ratios are also healthy with Common Equity Tier 1 at 14.6% after dividends and this year’s buyback, better than Barclays but not quite as high as RBS which reports tomorrow.
There had been speculation that the bank would announce another £1bn share buyback but so far that has failed to materialise.
