Source: Sharecast
Pre-tax profit for the six months to the end of June rose to £3.1bn from £2.5bn a year earlier as income rose 2% to £9.5bn.
The cost of PPI and other remediation programmes fell to £807m from £1.59bn as the PPI charge fell to £550m from £1.05bn. But the cost of PPI jumped in the second quarter and the bank increased its estimate for weekly claims.
Underlying profit rose 7% to £4.2bn, reflecting rising income and operating costs held steady at £4.2bn.
Impairment costs rose 70% to £456m and bad debts as a percentage of assets rose to 0.27% from 0.23% a year earlier but fell from 0.33% at the end of 2017.
Lloyds is Britain’s biggest retail bank, trading under its own name as well as Halifax, the UK’s biggest mortgage lender, and Bank of Scotland. Some analysts have said the bank is heavily exposed to the slowing UK economy, fragile consumer spending and the uncertainties of Brexit.
António Horta-Osório, Lloyds’ chief executive, said: “We have delivered a strong and sustainable financial performance in the first half of 2018 with increased statutory profit, higher returns and a strong capital build.
“The UK faces a period of political and economic uncertainty in the run-up to the UK’s departure from the European Union. However, the UK economy remains resilient and, excluding the impact of adverse weather, continues to demonstrate robust growth.”
As the biggest seller of PPI in the 1990s and 2000s Lloyds has paid out more than £19bn to compensate customers of Britain’s biggest misselling scandal.
The £550m charge in the first half included £460m in the second quarter. Lloyds said it expects claims to run at 13,000 a week until the deadline at the end of August 2019, up from an earlier estimate of 11,000 a week.
Lloyds' core equity tier one capital ratio, its key measure of financial strength, increased to 15.1% from 13.9%. The bank said it expected capital to build to the top end of its expected range in 2018 and for asset quality and the net interest margin to be stronger than previously guided.
The interim dividend increased to 1.07p a share from 1.0p.