Lloyds Q1 profit jumps as CEO Horta-Osorio heads for exit

Bank reports £1.9 billion pretax profit; Horta-Osorio leaves after decade in role

The bank’s profits were boosted by the release of £459 million that had been set aside for expected bad loans. File photograph: Andrew Matthews/PA Wire

The bank’s profits were boosted by the release of £459 million that had been set aside for expected bad loans. File photograph: Andrew Matthews/PA Wire

 

Lloyds Banking Group reported better than expected profits for the first three months of the year, in the last set of results before Chief Executive Antonio Horta-Osorio’s leaves Britain’s biggest domestic bank.

Lloyds reported £1.9 billion (€2.18 billion) pretax profit for the first quarter on Wednesday, compared to an average of analyst forecasts of £1.1 billion. The bank had posted a narrow £74 million quarterly profit a year earlier.

The bank’s profits were boosted by the release of £459 million that had been set aside for expected bad loans. It had been expected to book more charges to cover soured debts.

Horta-Osorio is leaving Lloyds after a decade in the role to become Chairman of crisis-hit Swiss bank Credit Suisse, with his appointment expected to be confirmed at an investor meeting on Friday. HSBC executive Charlie Nunn is set to join Lloyds as CEO in August.

HSBC kicked off British bank quarterly earnings on Tuesday by also posting better than forecast profits after a similar release of bad loan provisions.

Like HSBC, Lloyds said the economic outlook in Britain now looked better than it had initially feared, leading to the provisions release and improved guidance for the year.

Lloyds said return on tangible equity was now expected to be 8-10 per cent this year, while net interest margin would be above 2.45 per cent. Costs would be trimmed below £7.5 billion, the bank said.

Horta-Osorio is preparing to chair the board at Credit Suisse, widely seen as one of the toughest jobs in banking.

The Swiss lender is reeling from multi-billion dollar losses from the collapse of family office Archegos, the fallout from insolvent British finance company Greensill and a spying scandal last year that ousted its former CEO Tidjane Thiam.

Horta-Osorio set out fresh targets to expand Lloyds’ insurance and wealth business and further cut costs in February, but has left formulating a longer term strategy to his successor Nunn.

Nunn rose through the ranks at HSBC to become head of wealth and personal banking, after a career in consulting. – Reuters