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Lloyds Banking Group sees profits nearly double

Lloyds Banking Group saw its pre-tax profit nearly double to £2billion in the three months to the end of September, amid a booming mortgage market.

Beating previous profit predictions, the group said it had benefited from the economic rebound following the easing of Covid-19 restrictions.

The bank, which is the country's biggest mortgage lender, reported a pre-tax profit of £5.9billion for the first nine months of its financial year. 

Bumper profit: Lloyds Banking Group saw its pre-tax profit nearly double to £2bn in the three months to the end of September

Shares in the FTSE 100-listed group have risen today and are currently up 1.98 per cent or 0.97p to 49.93p. A year ago the share price was 27.65p. 

The bank, like others including HSBC and Barclays, said it enjoyed a boost from releasing more cash to its balance sheet held back during the pandemic. 

Lloyds held back £1.2billion during the Covid-19 crisis and has released £740million, including £84million in the past three months due to 'improvements to the macroeconomic outlook for the UK, combined with robust credit performance'.

It also enjoyed strong growth in mortgage lending, which was up £2.7billion in the period. Customer deposits rose to £479.1billion, up £28.4billion in the past nine months, and up £4.7billion in the third quarter.

Chief executive Charlie Nunn, who recently joined the group from HSBC, said: 'The mortgage market has been very strong. There has been low unemployment and low interest rates. People have looked to move outside urban centres to find more space.'

The bank said it will see future revenues rise ahead of previous guidance, and claimed its return on tangible equity looked set to come in at a better-than-expected figure of over 10 per cent. 

Motor finance loans saw a drop to £14.1billion from £14.4billion, while lending to small and medium sized business slipped from £40.4billion in the second quarter to £39.8billion in the latest quarter. 

Mr Nunn said he will be unveiling a new strategic review, although he did not go into detail.

He added: 'Building on the strengths of the group and its achievements in recent years, there are clearly significant opportunities for Lloyds Banking Group to further develop its platforms and capabilities and grow through disciplined investment empowering colleagues, enhancing collaboration and increasing agility across the group.' 

Michael Hewson, chief markets analyst at CMC Markets UK, said: 'Having resumed dividends earlier this year and given how well the bank appears to be doing, and assuming that we see a similarly robust fourth quarter, shareholders have every right in thinking that the full year numbers could see the bank improve its payout.'

Branch closures: Earlier this month, Lloyds Banking Group unveiled plans to close a further 48 Lloyds and Halifax bank branches in England and Wales next year

Richard Hunter, head of markets at Interactive Investor, said: 'Lloyds has joined the merry throng of the UK banks in the current reporting season, with a further release of credit impairments and improved guidance outlook for the year.'

He added: 'Less positively, there is still evidence of a cautious UK consumer continuing to pay down debt where possible, impacting lines such as credit card balances, where the margin is higher.

'As mentioned at its half-year results, dividend announcements will now be made on a half-yearly basis rather than quarterly. 

'These numbers tend to suggest that there could therefore be something of a bumper year-end bonus, where share buybacks and even a special dividend are distinct possibilities. 

'In the meantime, the shares have had a good run, having risen 73 per cent over the last year as compared to a rise of 30 per cent for the wider FTSE 100 and, with improved guidance and prospects in evidence, the market consensus of the shares as a buy will come under little threat.'

Earlier this month, Lloyds Banking Group unveiled plans to close a further 48 Lloyds and Halifax bank branches in England and Wales next year.

In total, 41 Lloyds Bank branches and seven Halifax branches will be closed for good with the lender claiming affected customers will still have access to cash 'within a third of a mile'.

All 48 bank branches will be shutting next year, and locations affected include Balham, Christchurch, Dorking, Prescot, Sevenoaks and Windsor.

Unite Union claims that around 178 jobs at Lloyds Banking Group could be affected.