Lloyds Banking Group PLC (LSE:LLOY) reported first-quarter profits slightly lower than a year ago, but in line with expectations as increased income and reduced volatility combined with higher costs and higher impairment charges.
The UK's largest lender reaffirmed guidance for the full year and said it was making "good progress" on its strategic transformation.
Lloyds reported statutory pre-tax profit of £1.52 billion, well up on the £0.82 billion in the last quarter of last year but down from £1.63 billion a year ago. It was very slightly short of the average analyst forecast of £1.54 billion.
An impairment charge of £309 million was taken, compared to £160 million in Q4 of last year and £57 million in Q1, which included a £100 million adjustment to "address downside risks to the base case related to the potential impact from US tariff policies announced at the start of April".
But the bank said it continued to enjoy "resilient asset quality" and its portfolio "remains well-positioned with stable and benign credit performance".
Return on tangible equity was 12.6% in the quarter, down from 13.3% delivered a year earlier, with guidance of 13.5% expected for the full year.
Net income rose 4% to £4.4 billion, supported by a 3% increase in net interest income to £3.3 billion and a 1% quarterly improvement in other income to £1.5 billion. For the full year, underlying net interest income of circa £13.5 billion was guided, unchanged from final results.
The banking net interest margin increased to 3.03% from 2.97% in Q4 last year and 2.95% in Q1.
CEO Charlie Nunn said the group’s has delivered "sustained strength in financial performance" and highlighted net income continued growth, following the upward trajectory established in the second half of last year.
He said the ongoing strategic transformation “supports our ambition of higher, more sustainable returns”.