Lloyds Banking Group has reported profits up by more than a fifth for the first quarter, saying it had made a strong start to the year.
That came despite setting aside more money to deal with compensating customers complaining over how they were sold payment protection insurance (PPI).
The bank said there will be no change to its financial targets, after reporting a 23 per cent rise in statutory profit before tax to £1.6bn, with return on tangible equity rising to 12.3 per cent. Lloyds said that reflected "improved underlying profit and lower below the line items".
For the three months ended 31 March, Lloyds reported underlying profit up six per cent from the same period last year to £2bn, while total income was up four per cent to £4.6bn.
It reported a PPI charge of £90m, which Lloyds said reflected the increased costs relating to the requirement under the Plevin ruling to proactively contact customers who have previously had their complaints defended.
For its full-year results reported last month, Lloyds said its provision for PPI rose from £1bn to £1.7bn.
Shares were flat in early trading.
Why it's interesting
The bank has been looking to demonstrate its progress since returning to full private ownership last May and with the final deadline for PPI complaints looming next year, will be hoping to put that saga firmly behind it.
Last month, it announced that it was plugging £3bn into a three-year strategy of upgrading its digital capability as it seeks to cut costs and gear up for competition.
It wants to cut costs below £8bn by 2020, translating into cuts of £180m compared to 2017, while splashing out more on training and digitising the bank's back office.
Lloyds also kicked off a share buyback programme of up to £1bn.
What the company said:
Today, chief executive Antonio Horta Osorio said work on the group's strategy to transform into "a digitised, simple, low risk, customer-focused UK financial services provider" had got off to a strong start.
In the first three months of 2018 we have again delivered strong financial performance with increased profits and returns, a significantly reduced gap between underlying and statutory profit and a strong increase in capital. These results continue to demonstrate the strength of our business model. In March, following our 2017 results and dividends announcement, we commenced our share buyback programme of up to £1bn.
The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth. Asset quality remains strong with no deterioration seen across the portfolio. We expect the economy to continue to perform along these lines during 2018.