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(Sharecast News) - Lloyds Bank held annual guidance despite a 28% fall in first-quarter profits due to lower net interest income and higher operating expenses, as competition for mortgages and savings squeezed margins.
Profit before tax for the first three months of 2024 was £1.63bn, down from £2.2bn a year earlier when higher interest rates saw booming profits in the sector and prompted the government to introduce a surcharge on excess profits. Earnings were also 8% lower quarter on quarter.
Net interest margin - the difference between what a bank makes on savings and loan rates - fell to 2.95% from 3.22%. Underlying net interest income decreased 10% to £3.2bn.
Impairment charges were down significantly to £57m from £243m a year earlier and a credit of £541m in the previous three months. It also beat average forecasts of £280m.
There was also no charge for possible claims against its motor finance business, after already setting aside £450m.
LLoyds also forecast a 1.5% rise in house prices by the end of the year, having previously expected them to fall by 2.2%. It also sees the economy growing 0.3% in most quarters and a drop in inflation to 2.4% - from 3.2% in March - resulting in a fall in interest rates to 4.5% by December and the Bank of England to cut rates three times in 2024, starting in the middle of the year.
Reporting by Frank Prenesti for Sharecast.com
