Lloyds surpasses earnings expectations, hints stress ahead. On Wednesday, Lloyds (LLOY.L) surpassed first-quarter profit predictions thanks to rising interest rates, but early signs of borrower concern indicated harsher times ahead.
Britain’s largest mortgage lender’s results showed how rate hikes that have boosted its profit margins are also pressuring the weakest clients, who are already facing Western Europe’s highest inflation rate.
Lloyds announced a pretax profit of 2.3 billion pounds ($2.9 billion) for the first three months of 2023, above the 1.95 billion pounds average of expert projections gathered by the bank and up from 1.5 billion pounds last year.
Lloyds said it saw more troubled loans despite the COVID-19 outbreak and rising consumer prices.
After reporting “modest” arrears increases, mostly in commercial banking loans and mortgages, Lloyds made a 243 million pound provision in the first quarter. It saved 177 million pounds last year.
The European banking stocks index rose 0.5%, while the bank’s shares fell 0.4% in early trade. (.SX7P)
Banks prospered as rates rose from 0.25% in December 2021 to 4.25%.
Lloyds has followed competitors in maintaining full-year performance estimates despite sector-wide earnings beats.
That decision indicated caution about profit-boosting rates, rising defaults, competition squeezing lending margins, and savers shopping around.
After HSBC, NatWest, and Barclays, Lloyds is the last of Britain’s ‘Big Four’ banks to announce quarterly results.
Lloyds, like others, recorded deposit outflows of 2.2 billion pounds throughout the quarter as clients dipped into savings and shifted money into other products.
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