How Halifax has given a boost to Lloyds' profits

Lloyds Banking Group has reported better than expected third quarter results despite increased restructuring costs.
Russell Galley, managing director, HalifaxRussell Galley, managing director, Halifax
Russell Galley, managing director, Halifax

The bank saw a 7 per cent fall in profits to £1.82bn in the three months to September 30. However, the figure was above consensus estimates of £1.7bn and total income for the quarter came to £4.69bn, an increase of 1 per cent.

The bank's net interest margin - the difference between the interest received from borrowers and the amount paid out on deposits - held steady at 2.93 per cent.

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Lloyds CEO Antonio Horta-Osorio said: "These results further demonstrate the strength of our business model and the benefits of our low-risk, customer-focused approach.

"As planned, our strategic investment has accelerated and is already delivering real benefits to customers, whilst operating costs continue to reduce."

Lloyds' performance was boosted by good growth at its Halifax banking arm.

Russell Galley, managing director, Halifax, said: “Our performance reflects the energy and enthusiasm we’ve maintained through the year, investing in helping make customers better off every day.

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“As one of the UK's leading current account providers, more than 34,000 customers switched to one of our accounts in the first half of the year thanks to our competitive products and second to none customer experience.

"We remain focused on making it easy for customers to make informed choices, and that’s why more than a million people have chosen to switch to us since the service began in September 2013."

Halifax recently opened a flagship branch on Oxford Street in London as part of its commitment to serving customers when and where it suits them.

"This means they can speak to our colleagues to help with their more complex needs, or online through our top-rated, easy to use mobile app," said Mr Galley.

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“We really took our mortgage advertising campaign to the next level in our inimitable Halifax way with The Wizard of Oz campaign – which had a staggering reaction.

"We also launched a £1,000 cashback offer as part of our £10bn commitment to helping people take their first step onto the property ladder.”

Over the quarter, Lloyds booked £235m in restructuring costs to cover the likes of redundancy payments to workers as it pushes ahead with a three-year strategy which will see it focus on digital banking.

The bank has been undergoing an overhaul of its workforce and branch network, having announced hundreds of job cuts and branch closures over the past 12 months.

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The group also announced the departure of finance chief George Culmer, who will retire from the company in 2019.

The results build on a strong run of form for Lloyds, which was fully returned to private hands last year, nearly nine years after the Government bailed it out at the height of the financial crisis.

At the peak, Lloyds was 43 per cent owned by the state after its bailout during the banking crisis when taxpayers were forced to inject £20.3bn into rescuing the bank.

The group has been dogged by PPI claims, having paid out more than £18bn to date to affected customers.

However, Lloyds took no additional charges in the quarter.

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PPI claims have ramped up following a Financial Conduct Authority advertising campaign featuring Arnold Schwarzenegger as part of an effort to encourage people to come forward before an August 2019 deadline for final claims.

Earlier this week, Lloyds and investment giant Schroders confirmed they are joining forces to create a new wealth management venture.