Results round-up

Lloyds Banking Group set aside a further provision of £1bn for compensation for mis-selling payment protection insurance in the third quarter of the year, but the bank reaffirmed full year guidance despite a dip in net income and profits.

Net income of £2.85bn in the three months ended 30 September fell 1% from the same period last year, with underlying profits down 3% to £1.91bn as increased impairments offset lower costs and so fell short of the £2.04bn Bloombergconsensus.

Net interest margin, the measure of how well the bank balances the amount it pays out on savings and makes on loans, fell to 2.72 for the first nine months of the year from the 2.74 at the end of the first half, largely as expected due to the low interest environment.

For the full year NIM is expected to be 2.70, with other full year guidance also reaffirmed for the cost-to-income ratio, asset quality and Tier 1 core capital generation.

A highlight of the quarter was the strong capital generation, with net capital generation of 0.6 percentage points meaning common equity tier 1 (CET1) ratio stood at 14.1% pre dividend and 13.4% post dividend.

Chief executive António Horta-Osório's reconfirmed that if the CET1 ratio is over 13% by year end then Lloyds will pay a special dividend.

Yet the new provision taken in the period to cover further operating costs and redress for PPI included the impact of the extended June 2019 deadline, while Lloyds also set aside a further provision of £150m in the third quarter to cover other conduct issues, including £100m for packaged bank accounts, meant statutory profits were reduced to £0.8bn.

The bank's pension scheme has also swung to a deficit of £740m from the previous surplus of £430m due to falling corporate bond yields.

The 'simplification programme' put in place by Horta-Osório, which saw an announcement earlier in October about plans to cut 1,230 jobs, has so far reduced annual run rate costs by £774m and is on track to meet the revised target of £1.4bn of savings by the end of 2017.

"The outlook for the UK economy remains uncertain, however the strength of the recovery in recent years means the UK is well positioned," Horta-Osório said.

"The group's transformation and successful execution of strategy, along with its competitive advantages in costs and risk, also position us well for the future and to achieve our goal of becoming the best bank for customers and shareholders."

Metro Bank swung to a pre-tax profit in the third quarter – its first quarterly profit ever – as revenue surged 78%.

The bank generated an underlying pre-tax profit of £0.6m compared a £3.4m loss in the same quarter last year, as revenue rose to £53.4m from £46.3m.

Chief executive officer Craig Donaldson said: "I am delighted to announce another strong quarter, with substantial growth across lending, deposits and customer accounts as well as the bank reporting its first quarterly underlying profit. We continue to show strong deposit growth even as the cost of our deposits falls. This clearly demonstrates that our offering of high-impact, convenient high street stores, UK based contact centres and easy to use online and mobile services is persuasive for retail, business and private customers.

"We continue to expand the business to generate long-term, sustainable growth, with revenue up 78% year-on-year and an underlying quarterly profit before tax for the first time of £0.6m. As we move into underlying profit our customer-focused culture and commitment to providing a superior banking experience remain at the very forefront of our offering, and we look forward to welcoming even more retail, business and private banking customers to the banking revolution."

As of 30 September, the bank’s total assets were £9.0bn, up from £8.4bn at the end of June and £5.4bn at the end of September last year, representing year-on-year growth of 66% and 8% growth in the quarter.

Total loans as of 30 September were £5.2bn from £4.6bn art the end of June and £3.0bn at the end of September, up 73% year-on-year and a 12% increase on the quarter.

In terms of customer acquisition, accounts rose from 780,000 on 30 June to 848,000 at the end of September, which is a record quarterly net increase of 68,000 accounts. This represents a 41% year-on-year rise and a 9% increase in the quarter