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31 Oct 2019 | 07:20

Lloyds Banking profit slumps on higher PPI bill

Lloyds Banking reported a sharp fall in profit as further payments for protection insurance claims in the third quarter dented growth. In the three months ended 30 September, pre-tax profit fell 97% to £50m from £1.8bn a year earlier, and included an additional £1.8bn PPI charge in the quarter, the company said. Underlying profit of £6.0bn amid a 'challenging external environment, with lower net income partly offset by lower total costs and higher impairment charges,' the bank said. Net income fell £13.0bn, down 3%, with slightly lower average interest-earning banking assets of £434bn, net interest margin of 2.89% and other income of £4.4bn, down 4%. Looking ahead, the bank kept said it expected to report net interest margin of 2.88%, compared with previous guidance of about 2.90%. Operating costs were now expected to be less than £7.9bn, ahead of previous guidance, and the cost-the-income ratio lower than in 2018. 'Given the PPI charge in the third quarter, equivalent to 88 basis points, the Group now expects, assuming no unforeseen events, free capital build of around 75 basis points in 2019,' the company said.

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