Lloyds reports doubled profits

Lloyds Banking Group doubled its profits during the first three months of the year amid a “sweet spot”, thanks to the economy’s resilience since the Brexit vote.

The lender, which is now less than 2% owned by the government, posted a better-than-expected set of first-quarter figures, with pre-tax profits surging to £1.3billion, up from £654million a year earlier.

This came despite the bank being forced to set aside £350million to cover mis-sold payment protection insurance claims and £100million to cover compensation for victims of fraud by former HBOS staff.

On an underlying basis, the group saw a more muted 1% rise in profits to £2.08billion, but this defied expectations for a decline as it said the economy was still holding up well.

“Lloyds Banking Group is in middle of a ‘sweet spot’”

Lloyds – a bellwether of the economy, given its position as the biggest mortgage lender – said growth remained strong and is expected to continue at a similar rate to 2016, at around 2%.

Richard Hunter, head of research at Wilson King Investment Management, said the bank was in the middle of a “sweet spot” caused by the robust economy.

But experts flagged concerns over the bank’s exposure to a downturn, with fears mounting that surging inflation caused by the Brexit-hit pound will bring an end to consumer spendingdriven growth.

The first-quarter earnings mark another step forward in the bank’s recovery story as it edges closer to being fully returned to private hands, with the government stake being cut to below 2% this month. Shares in Lloyds rose 3% after the first-quarter figures.