Lloyds Banking Group PLC (LSE: LLOY) reported robust first-quarter results, surpassing expectations and recording a 46% increase in profit.
The bank attributed this to a boost in net income due to a higher interest environment. For the three months ending March 31, net income rose 15% to £4.7bn, while pre-tax profit jumped to £2.26bn, beating analyst forecasts of £1.95bn.
The underlying net interest income grew 20% to £3.54bn, with the net interest margin remaining unchanged from the fourth quarter at 3.22%, but 54 basis points higher than Q1 2022.
Operating costs rose 5% to £2.2bn, attributed to higher strategic investment, inflationary effects, and costs of new businesses.
Asset quality remained resilient with an underlying impairment charge of £0.2bn and an asset quality ratio of 22 basis points. While loans and advances to customers fell, commercial banking deposits increased, and the CET1 ratio of 14.1% remained above the 12.5% ongoing target.
Lloyds Banking Group PLC expects continued growth, with banking net interest margin expected to be above 305 basis points, operating costs around £9.1bn, asset quality ratio around 30 basis points, a return on tangible equity around 13%, and capital generation at around 175 basis points.
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