LONDON - Lloyds Banking Group reported a large jump in its first quarter net profit on Tuesday as the British bank continued to reduce costs and sheds assets to increase its profitability.
Lloyds, which is 39 percent owned by the British government after receiving a bailout during the financial crisis, said earnings in the first three months of the year rose to £1.5 billion ($2.3 billion), compared to a £5 million loss in the same period in 2012.
The earnings beat analysts’ estimates, and were driven by higher revenues across the firm’s main retail banking business, falling costs as the bank sold assets and a reduction in money set aside to cover delinquent mortgages, according to a company statement.
“We made substantial progress again in the first quarter,†the chief executive, António Horta-Osório, said in a statement.
Shares in the British bank rose almost 5 percent in early morning trading in London on Tuesday.
Lloyds added that it had not made further provisions for the inappropriate selling of financial products. Lloyds and other local lenders have been forced to pay out billions of pounds in recent years after they sold insurance products to British customers who did not require them.
As British regulators push banks to shore up their capital positions, Lloyds also has been actively increasing its reserves through a series of recent disposals.
On Monday, Lloyds offloaded its Spanish unit to the Spanish lender Banco Sabadell. Lloyds also is planning the initial public offering of part of its branch network as part of the conditions of its government bailout in 2008. The firm made a £394 million profit last month from selling a 20 percent stake in the wealth management firm St. James’s Place.
In March, regulators said British financial institutions combined would have to raise a further £25 billion in capital. Many analysts expect Lloyds will have to raise additional funds, though the firm said on Tuesday that it was still waiting to receive guidance from the local authorities.
The bank’s core Tier 1 ratio, a measure of the ability to weather financial shocks, remained flat, at 8.1 percent, under the accountancy rules known as Basel III.
During the first quarter of the year, Lloyds said it had continued to reduce its costs and cut the amount of money set aside to cover delinquent loans.
Impairment charges in the first quarter fell 40 percent, to £1 billion, compared to the same period in 2012, while Lloyds’ non-core assets fell 6 percent, to £92.1 billion, over the last three months.
