British bank Lloyds swings back to profit

Britain’s Lloyds Banking Group (LBG) said on Thursday, October 29, that it rebounded into the black in the 3rd quarter, boosted by an “encouraging” recovery in business demand and lower impairments linked to the coronavirus.

Profit after taxation hit £688 million ($894 million, 761 million euros) in the 3 months to September, after a net loss of £461 million in the 2nd quarter on COVID-19 fallout, LBG said in a statement.

The group had suffered a net loss of £238 million in the 3rd quarter of 2019 when its performance had been hurt by the credit insurance mis-selling scandal.

Lloyds said that it took an extra £301-million charge linked to virus fallout in the reporting period.

“The impact of the coronavirus pandemic on the global economy and on people and businesses within the UK has been unprecedented. We remain focused on working together with the government and our regulators to ensure that we continue to support our customers in this challenging time,” said chief executive Antonio Horta-Osorio.

“Although our performance has clearly been impacted by the pandemic and the associated challenging economic environment, I am pleased that we are now seeing an encouraging business recovery and, with impairments significantly lower, a return to profitability in the 3rd quarter.”

Annual writedowns linked to the coronavirus pandemic would be at the lower end of its previous forecast range of £4.5 billion to £5.5 billion, it predicted.

However, Lloyds was cautious about the outlook due to the deadly second wave of infections and Britain’s ongoing attempts to reach a Brexit trade deal with the European Union.

“The outlook remains highly uncertain given the second wave of coronavirus, government response including social distancing measures and the end of the furlough scheme, together with the ongoing Brexit negotiations,” the bank said.

From next month, the UK government waters down its so-called furlough jobs support scheme that has helped keep millions of people in employment during the pandemic.

Lloyds noted that the health crisis had boosted demand for its digital products, as many customers work from home and avoid shopping on the nation’s high streets.

“The pandemic has accelerated many trends around ways of working and digital adoption and our long-run investment in digital propositions has positioned the group well to continue to support our customers,” said Horta-Osorio.

“As a result, the number of digital users continued to increase, the proportion of products sold digitally is rising and customer satisfaction is at record levels. Our digital proposition and focus on technological change will remain a priority as we accelerate our transformation.” – Rappler.com