Britain’s Lloyds Bank reported a 2.9% increase in underlying profit to £1.9bn ($2.3bn) for the quarter ended June. Underlying net interest income rose 16% YoY to £3.2bn ($3.9bn), which was above analyst expectations of £3bn ($3.6bn). This was slightly offset by impairment charges of £200mn ($241mn) vs. an impairment release of £374mn ($455mn) last year. Cost wise, restructuring cost stood at £23mn ($27.8mn) and remediation cost came down to £27mn ($32.6mn) from £360mn ($434.5mn) in the previous year. This led to a significant improvement in the cost-to-income ratio, from 60.7% last year to 50.2% for Q2 2022. The bank’s net interest margin (NIM) improved 36bp YoY to 2.51%. In the quarter, Lloyd also announced a dividend of 80 pence ($0.96) per share, 20% higher than the first half of last year. For 2022, the bank has guided for NIM to be over 2.8% and expects its asset quality ratio to remain below 20bp; it stood at 17bp as of June-end. Furthermore, the bank had completed £1.3bn ($1.6bn) of share buybacks during Q2, with 2.8bn shares purchased in the first half of the year. The group’s CET1 ratio stood at 14.7%, down 200bp YoY.
Lloyds Bank’s 6.75% perps callable in 2026 are up 0.41 points, trading at 97.1 at yields of 7.61%.