Lloyds Banking To Start $2.5 Billion Buyback After Profit Beat Expectations

By Elena Vardon

Lloyds Banking Group launched a 2.0 billion pound ($2.53 billion) share buyback program after it posted better-than-expected profit for the fourth quarter of 2023 despite lower income and a heavier provision.

The British lender on Thursday posted pretax profit for the three months to Dec. 31 of GBP1.775 billion pounds compared with GBP1.06 billion for the same period a year earlier and with GBP1.65 billion expected by a company-compiled consensus.

The FTSE 100 listed bank's net income fell to GBP4.23 billion from GBP4.69 billion for the year-earlier period, missing consensus' GBP4.43 billion estimate. Net interest income made up GBP3.32 billion of the total, against expectations of GBP3.37 billion.

Its net interest margin--the difference between what it earns on loans and pay out on deposits--for the quarter was 2.98%, against expectations of 3.01%. For 2024, it guided for margin above 2.90%--while analysts pencil in 2.96% for the year--as the benefits from higher interest rates which boosted its top line over 2023 start to taper off.

It also sees heavier-than-expected costs for the year ahead as it guided for around GBP9.3 billion in operating expenses, up from its previous view of around GBP9.2 billion and reported GBP9.14 billion in 2023.

Lloyds Banking said that it booked a GBP450 million provision in its quarterly results for the potential impact of the Financial Conduct Authority's review into historical discretionary commission arrangements in the motor finance industry, to which the bank is exposed to through its Black Horse brand.

The board declared a final dividend of 1.84 pence, bringing the full-year payout to 2.76 pence.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

February 22, 2024 02:56 ET (07:56 GMT)

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