Lloyds Banking Group has cheered a “resilient” UK economy as its first-quarter profit rose, despite taking another £90m hit from the payment protection insurance scandal.
The bank reported a 6% increase in underlying pre-tax profit to £2bn for the three months to 31 March. Bottom-line profit jumped 23% to £1.6bn, although this fell slightly short of analysts’ expectations.
But Lloyds added £90m in costs for PPI mis-selling claims, taking its total bill for the issue to £18.8bn.
António Horta Osório, the chief executive, said: “We have made a strong start to 2018 and have begun implementing the strategic initiatives which will further digitise the group, enhance customer propositions, maximise our capabilities as an integrated financial service provider and transform the way we work.
“The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth. We expect the economy to continue to perform along these lines during 2018.”
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said Lloyds had made a good start to 2018, with the bank benefiting from rising interest rates and its £1.9bn acquisition of MBNA from Bank of America in 2016.
However, while the bank has rebuilt profit and delivered steady returns to investors, share price gains have proved more elusive, Khalaf said.