The English bank, led by Portuguese António Horta Osório, announced its third quarter results. The CEO emphasizes that the “resilient business model” allowed the return to profits in the third quarter. Lloyd's Banking Group recorded profits between July and September of 688 million pounds (762 million euros), which compares with losses of 238 million pounds (-263,6 million euros) in the same months of the previous year.
In the nine-month period, the bank led by António Horta Osório recorded profits of 707 million pounds (783 million euros), which translates a drop of 64% compared to 1,987 billion pounds (2,2 billion euros) in the nine months of 2019.The bank made pre-tax profits of £ XNUMX billion.
Lloyd's speaks of a 7,4% ROTE (return on tangible capital) in the quarter, to demonstrate a return to profitability.
Impairments of 4,119 billion pounds (4,6 billion euros), mostly for credit, which compares with 950 million pounds (1,05 billion euros) justify the 64% drop in the group's net results. Once again, this volume of impairments results from the adoption of the new macroeconomic framework resulting from the pandemic crisis. The bank now has a year-round impairment estimate of around £ 4,5 billion (around € 5 billion), standing at the lower end of the 4,5-5,5 billion range of pounds that was given in the semester results in July.
Net interest income totaled £ 10,8 billion (€ 12 billion) in the nine months, reflecting a 17% drop, with £ 3,4 billion in the third quarter, reflecting a rate environment lower interest rates and falling other revenues (for example from asset management).
The bank reported total costs of £ 5,8 billion (4% lower than the same period last year), with reduced operating costs, “allowing for continued investment in digital projects and improving customer support during the pandemic. The bank in the third quarter recorded total costs of £ 1,9 billion below the same period in the previous year ”.
The difference between revenue and costs is a surplus of £ 5 billion in the nine months (including £ 1,5 billion in the quarter), providing significant capacity to absorb the deteriorating impacts of the coronavirus crisis, the bank said. .
“Although our performance was clearly affected by the pandemic and the challenging economic environment associated with it, I am pleased to now see an encouraging business recovery and, with significantly lesser losses, a return to profitability in the third quarter. In particular, new mortgage loan applications increased by £ 3,5 billion in the quarter (…) and we support companies with an 18% share in loans secured by the State. Given the financial performance, we were able to further strengthen our capital position to 15,2% and guided our guidance on impairments and risk-weighted assets (RWA) ”, says António Horta-Osório in the Report and Accounts.
Horta-Osório also points out that the pandemic has accelerated many trends around forms of work and digital adoption and “our long-term investment in digital proposals has positioned the Group well to continue supporting our customers. As a result, the number of digital users has continued to increase, the proportion of products sold digitally is increasing and customer satisfaction is at record levels. Our digital proposal and focus on technological change will continue to be a priority as we accelerate our transformation ”, says the CEO.
"The Group's 2020 orientation reflects a proactive response to the challenging economic environment and is based on the Group's current macroeconomic assumptions," says Lloyd's.