Profits jump at Lloyds

Lloyds, which is 39 per cent owned by the Government, said it was pushing on with plans to float 630 branches that European authorities have ordered it to sell as a price of a state bailout during the financial crisis.

A planned sale of the network collapsed last week.

The bank said costs in the first quarter fell six per cent from a year ago and it expected to cut costs to about £9.15bn in 2014, a reduction of £2bn from 2010 and double the target in its restructuring plan.

Lloyds reported an underlying profit of £1.48bn for the first quarter, up from £497m a year ago.

“The first quarter shows we are making significant progress and are ahead of our plan to transform the group,” chief executive Antonio Horta-Osorio said on a conference call.

Lloyds’ capital strength has come under scrutiny after the Bank of England’s Financial Policy Committee said last month that UK banks needed about £25bn of extra capital. Analysts had said that meant Lloyds might need to raise cash.

Lloyds said it was waiting for Britain’s financial market regulator to decide what action might be required of banks after the FPC’s estimates, but said it was confident in its capital position.

Its core capital was 12.5 per cent at the end of March and should be nine per cent at the end of this year, based on the full impact of new Basel III capital rules. That should rise above 10 percent by the end of 2014, it said.