Lloyds Banking Group (LON:LLOY), today released Q3 2018 interim Management Statement
· Statutory profit after tax of £3.7 billion up 18 per cent, with a 5 per cent increase in underlying profit, an 11 per cent reduction in below the line charges and a lower effective tax rate
− Net income at £13.4 billion, 2 per cent higher, with net interest margin stable in the quarter at 2.93 per cent
− Operating costs reducing with lower business as usual costs1 offsetting increased investment; cost:income ratio further improved to 47.5 per cent with positive jaws of 5 per cent
− Asset quality remains strong with no deterioration in credit risk; gross asset quality ratio stable at 28 basis points with increased net asset quality ratio of 22 basis points reflecting expected lower write backs and releases
· Loans and advances up £2.3 billion in the quarter with prudent lending growth in targeted segments
· Return on tangible equity increased to 13.0 per cent and earnings per share up 21 per cent to 4.7 pence
· Balance sheet strength maintained with strong CET1 capital build of 41 basis points in the quarter and 162 basis points year to date; CET1 ratio of 14.6 per cent post dividend accrual
· £1 billion share buyback complete with more than £3.2 billion returned to shareholders during 2018, equivalent to over 4.5 pence per share
· Tangible net assets per share of 51.3 pence; increased in the quarter by 0.3 pence before interim dividend
· Financial targets for 2018 and longer term reaffirmed
Significant strategic progress with strong start to the Group’s latest strategic plan
· Digitising the Group
− Investment in robotics driving process improvement and enhanced productivity with c.600,000 hours saved
− Private Cloud solutions delivering more efficient, scalable and flexible infrastructure
· Leading Customer Experience
− Reduced branch account opening times by c.40 per cent
− Integrated API-led Open Banking proposition to be launched in November
· Maximising Group Capabilities: Financial Planning and Retirement
− Announced strategic partnership with Schroders to create a market-leading wealth proposition. Aim to be top-three UK financial planning business within 5 years
− Insurance and banking single customer view rolled out to more than 3 million customers
− Simplified pension consolidation process, reducing completion time and increasing conversion rates
· Transforming Ways of Working
− c.40 per cent uplift in colleague training to c.550,000 hours
In the first nine months of 2018 we have delivered a strong and sustainable financial performance, with increased profits and returns and continued strong capital build. These results further demonstrate the strength of our business model and the benefits of our low risk, customer focused approach.
We have also made a strong start to our 2018 to 2020 strategic plan. We have been implementing the initiatives which we announced in February as part of our ambitious strategy to transform the Group for success in a digital world. As planned, our strategic investment has accelerated and is already delivering real benefits to customers whilst operating costs continue to reduce. We have also just announced a wealth management joint venture initiative with Schroders, demonstrating the Group’s focus on enhancing our customer proposition and growing our financial planning and retirement businesses.
We remain on track to deliver the improved financial targets for 2018 that we announced in August, as well as all of our longer term guidance.
António Horta-Osório, Group Chief Executive of Lloyds Banking Group
