Reports

Lloyds Bounces Back Into Profit In First Half Of 2013

Tom Burroughes Group Editor London 1 August 2013

Lloyds Bounces Back Into Profit In First Half Of 2013

Lloyds Banking Group, which has been part-owned by the UK taxpayer since the financial crisis, appears to be returning to brighter fortunes by reporting a statutory pre-tax profit of £2.134 billion.

Lloyds Banking Group, which has been part-owned by the UK taxpayer since the financial crisis, appears to be returning to brighter fortunes by reporting a statutory pre-tax profit of £2.134 billion (3.23 billion) in the six months to 30 June, bouncing back from a £456 million loss a year earlier.

With policymakers and investors pondering when and if the bank will be returned fully to private hands, Lloyds also reported a group underlying profit of £2.902 billion, versus £1.044 billion last year. The bank had a core Tier 1 capital ratio of 13.7 per cent at the end of June.

“We are now well on track to create a bank with a leading cost position, lower risk, a lower cost of equity, and products and services focused on our customers' needs, to deliver strong, stable and sustainable returns to our shareholders,” António Horta-Osório, chief executive, said in a statement.

In the wealth, asset finance and international segment – a unit including private banking – Lloyds logged an underlying loss of £101 million, narrowing from a £706 million loss, down 86 per cent, a year before.

The narrower loss was “primarily due to a £541 million reduction in impairments, strong banking net interest margins and lower costs, partially offset by a fall in income as a result of the balance sheet reduction together with the impact from the sale of approximately 37 per cent of St James's Place”, Lloyds said. (St James’s Place is a wealth advisory group in which the bank had had a substantial stake).

Lloyds has been spinning off its international private banking business. In May, the bank sold its International Private Banking business in Miami to Spain’s Banco Sabadell for an all-cash sum of up to £8 million ($12.1 million). That move came shortly after Lloyds moved to sell its Geneva-based private bank to Union Bancaire Privée, and followed the sale of its Spanish retail operations to Banco Sabadell in April. The bank is reducing and simplifying its international businesses to focus its wealth management operations on the UK, the Channel Islands, and UK expats.

In the wealth, international and asset finance segment, Lloyds said funds under management dropped by 17 per cent to £156.8 billion but increased 1.6 per cent when the St James's Place business is excluded.

The underlying AuM increase is mainly driven by improved investment markets which have driven an increase of £5.9 billion, however, partially offset by reductions arising from the disposals in the period of our businesses in Luxembourg and Spain together with net outflows of £5.3 billion mainly as a result of attrition within the Scottish Widows Investment Partnership insurance funds and the payment of a dividend from the insurance division of £1.6 billion.

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