Lloyds Banking Group PLC (LSE:LLOY) has reported an increase in third-quarter income, in line with market forecasts, but profits slumped more than predicted due to an unexpectedly high rise in bad debt provisions.
Net income of £4.59bn was up 13% year-on-year, but the UK's biggest high street lender also announced a jump in bad debt charges to £668mln, taking the total for the nine months to date this financial year to £1.045bn.
Underlying profits before the impairment charges were £2.4bn, a 22% increase on the same period last year but once they are included underlying profits were down 17% to £1.73bn.
Statutory pre-tax profits slumped 26% to £1.5bn from £2bn this time last year and below City forecasts.
The FSTE 100-listed bank said its CET1 capital ratio of 15.0% remained well ahead of the ongoing target of around 12.5% and it remained committed to looking at returning excess capital returns as usual at year-end.
Looking ahead, the bank updated its 2022 guidance and said banking net interest margin are now expected to be greater than 290 basis points, operating costs are expected to be circa £8.8 billion, the asset quality ratio is now expected to be around 30 basis points and return on tangible equity expected to be about 13%.
In the results statement, Charlie Nunn, Lloyds Banking group chief executive said: “Our income growth, balance sheet momentum and resilient customer franchise have enabled the Group to deliver a robust financial performance and strong capital generation, alongside updated guidance for 2022.”