The bank, which owns the Halifax, also revealed a further £100m charge for the payment protection insurance (PPI) scandal. The lender is handling around 13,000 complaints a week over PPI mis-selling.
Despite fears over Brexit uncertainty and its impact on the economy, Lloyds said its results remain on track for the full year.
Russell Galley, managing director at the Halifax, said: "The group has delivered a strong performance in the first quarter and I’m proud of the contribution that Halifax has continued to make as we enter an exciting new phase for the brand.
"We recently refreshed our advertising with a more modern and relevant feel. Our new strategy reflects how Halifax ‘makes it happen’ for customers – from the big moments like getting the keys to a new home, to simply paying in a cheque via our mobile app.
"We have also given our famous ‘X’ logo – which was introduced in 1988 – a bolder new look. Halifax has been helping people buy homes for 160 years, and we continue to be the bank that enables them to achieve what’s important to them and their families."
Mr Galley said that Halifax customers have been rewarded with more than £34.5m in cashback through its mortgage and switcher campaigns, supporting the group’s £30bn commitment to helping more people take their first step on to the property ladder. The Halifax Savers Prize Draw has now given out a total prize fund of £58m since it launched in 2011.
"In November we launched our first ever Mortgage Prize Draw and the winners are now starting to be drawn. Three winners will have their mortgages paid off in full and 100 runners up will win cash prizes of £1,000," said Mr Galley.
He said the Halifax has introduced a new suite of features in its mobile banking app to make it easier for customers to stay connected to their finances.
"This includes our new Save the Change service – every time registered customers shop with their debit card, the amount is rounded up to the nearest pound and put straight into their savings account. We’ve already had more than a million registrations," said Mr Galley."We’re putting lots of energy into making earning cashback easier than ever. Since 2013, our Everyday Rewards scheme has paid out more than £40m to Lloyds Banking Group customers – making it one of the biggest card-linked loyalty programs in Europe. We have enhanced our Halifax Cashback Extras to help customers get even more cashback and see the total they’ve earned."
Antonio Horta-Osorio, group chief executive of Lloyds, said: "While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model, and in particular our market-leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders."
It also booked charges of £126m for restructuring and another £339m, including an estimated charge for ending its mammoth contract early with asset manager Standard Life Aberdeen.On an underlying basis, it reported a better-than-expected 8 per cent rise in underlying profits to £2.2bn for the three months to March 31.
The group said it now does not expect another interest rate rise until next year at the earliest as Brexit worries hold back business spending and the deal outcome remains unclear given the recent six-month delay to the EU departure.
The group's results also showed a £4.9bn fall in mortgage lending as the group said it suffered amid a highly competitive market.
The results follow disappointing first quarter results from Royal Bank of Scotland and Barclays, which blamed their falling margins on intensifying competition in mortgages and slowing business investment due to Brexit uncertainty.
Lloyds received a boost on Wednesday after regulators at the Bank of England said it could hold a lower capital buffer against future risks, giving Lloyds a further £1bn of excess capital which analysts speculated could be returned to investors.
The bank has been ramping up payouts for shareholders over the past two years as profits have improved and after returning to private ownership in 2017 following a state bailout during the financial crisis.