Lloyds Banking Group plc
Q3 2019 Interim Management Statement
31 October 2019
António Horta-Osório, Group Chief Executive said:
“In the first nine months of 2019 we have made strong strategic progress and delivered solid financial performance in a challenging external environment. I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August. However, our performance continues to demonstrate the resilience of our customer franchise and business model, the strength of our balance sheet and that our strategy is the right one in this environment.
We will maintain our prudent approach to growth and risk whilst continuing to focus on reducing costs and investing in the business to transform the Group for success in a digital world. Although continued economic uncertainty could further impact the outlook, we remain well placed to support our customers and to continue to Help Britain Prosper.”
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HIGHLIGHTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2019
Strong strategic progress and the right strategy in the current environment
Solid financial performance with statutory result impacted by additional PPI charge
− Net income of £13.0 billion, down 3 per cent, with slightly lower average interest-earning banking assets of £434 billion, net interest margin of 2.89 per cent and other income of £4.4 billion, down 4 per cent − Total costs of £6.0 billion down 5 per cent driven by reductions in both operating costs and remediation charges. Market-leading cost:income ratio further reduced to 46.5 per cent with positive jaws of 2 per cent − Credit quality remains strong. Net asset quality ratio of 29 basis points, including a single large corporate charge in the third quarter
Balance sheet strength maintained with lower Pillar 2A requirement
Outlook
− Net interest margin of 2.88 per cent, in line with previous guidance of c.2.90 per cent − Operating costs now expected to be less than £7.9 billion, ahead of previous guidance, and cost:income ratio to be lower than in 2018 − Net asset quality ratio of less than 30 basis points − Free capital build of c.75 basis points, post the PPI charge of 121 basis points
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