Daily Management Review

Lloyds profit fell by 44% after bonds redemption


04/28/2016


British bank Lloyds Banking Group PLC reported a sharp drop in net profit in the I quarter of 2016 due to restructuring charges and redemption of bonds.



www.moneybright.co.uk
www.moneybright.co.uk
In January-March, the British retail bank, which 9.2% are owned by the country’s government, decreased the revenues by 1% to 4.4 billion pounds ($ 6.4 billion). Lloyds’ net profit fell by 44%, to 531 million pounds.

Lloyds shares fell 2% in morning trading in line with other UK banks.

Like other lenders, Lloyds is facing the problem of reducing the profitability due to low interest rates. Recently, the bank announced the expansion of cost-cutting plans. Lloyds will reconsider its three-year strategy adopted in 2014, to achieve the objectives of reducing costs earlier than was planned originally, said the bank’s chief financial officer, George Kalmar.

At the same time, the bank intends to "continue to have a good steady income," added Kalmar.

Lloyds’ financial results were affected by the bank’s decision to spent 790 million pounds on buying back bonds with high interest payments that were sold to investors during the crisis. This, however, has helped increase the bank's net interest margin to 2.74% - 14 basis points higher than a year earlier.

Provisions for possible loan losses were reduced by 6% to 149 million pounds.

The bank's head Antonio Horta-Osorio is cutting thousands of jobs to modernize the business and maintain a progressive dividend policy within the final phase of the recovery plan. The latter was adopted after Lloyds had been saved from bankruptcy by the British government during the financial crisis of 2007-2009.

In January, the UK government has postponed the planned sale of its stake in the bank, referring to the ongoing turmoil in the financial markets. 

source: telegraph.co.uk






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