Lloyds Bank profit increase pushes share price up, despite £660m loss over TSB sale
The sale of TSB has come at a big price for Lloyds, but investors are undeterred.
The figures
Lloyds share price has gone up 3.38 per cent, after underlying pre-tax profit rose 21 per cent and beat analyst expectations.
Lloyds Bank statutory profit before tax slipped 11 per cent in the first quarter of 2015, falling to £1.2bn from £1.4bn in the same quarter last year, after it lost £660m from the sale of TSB to Banco Sabadell.
Underlying pre-tax profit beat analyst expectations, however, rising to £2.2bn for the three months, which was ahead of the £2bn forecast.
Total income was up three per cent to £4.6bn.
Why it's interesting
Lloyds has taken a big hit over the sale of TSB.
The bank had to spin-off TSB as a prerequisite to receiving state aid back in 2008. Now, the sale is costing Lloyds dearly because of hefty fees resulting from the need to migrate TSB from Lloyds IT servers – a cost estimated at £450m.
TSB was sold to Spanish lender Sabedell in March.
2015 marks the first year since the 2008 government bailout that Lloyds will pay a dividend to shareholders, and could pave the way for the government to further cut its 20.9 per cent stake in the bank.
What Lloyds said
Antonio Horto-Osorio, group chief executive, said:
We have made a strong start to the next phase of our strategy to become the best bank for customers and shareholders, as we continue to support and benefit from UK economic growth. I am pleased with the continued improvement in financial strength and performance in the first quarter and expect our plan to deliver sustainable growth and improved returns.
In short
This will be the first year since the financial crisis that Lloyds will pays a dividend, and the robust capital growth seen here will be good news for shareholders.
