- H1 net income down 9% to £8.4bn (£8.5bn expected)
- H1 underlying profit down 13% to £3.5bn (£3.4bn expected)
- H1 net interest margin 2.94% (2.94% expected)
- Q2 impairment £44mn (£305mn expected)
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Lloyd’s shares are under pressure in early trading. Investors should look past the headline year-on-year numbers; they don’t make for great reading. It’s long been expected that performance will lag the record levels seen over 2023. That doesn’t mean it’s time to turn away.
An improved economic outlook for the UK drove the better-than-expected profit performance, as impairments came in below expectations. Underneath the accountants’ mojo, borrowers continue to show resilience in the face of higher interest rates. Lloyds grew the loan book over the period, with a slight uptick in new mortgages. These still aren’t as profitable for the banks as they have been in the past, but it’s a good sign that demand’s coming back.
Deposit growth completed the balance sheet clean sweep. Savers are still favouring the longer-term accounts, trying to take advantage of higher rates before they disappear. That’s acting as a headwind for Lloyds, but one that’s easing as savers opt for limited withdrawal products over longer-term fixed accounts.
There was a slight disappointment on the top line, driven by the auto leasing business struggling with lower EV prices. But that’s a Lloyds-specific issue, and broader banking trends continue to look encouraging. Read across for the wider set of UK-focused names, like NatWest, is mainly positive.”
