Lloyds Banking Group has reported £1.9bn in pre-tax profit for the first quarter of 2021 after releasing £459m set aside for loan loss provisions.
This decision was based on improvements to the UK’s economic outlook, including the impact of the government’s furlough scheme being extended.
In the first quarter of 2020 Lloyds reported pre-tax profit of just £74m, with loan loss charges almost wiping out its earnings.
The banking group – which includes Lloyds Bank as well as Halifax, Bank of Scotland and Scottish Widows – took a £1.4bn charge at the start of the Covid-19 outbreak and over the course of the year it put aside a total of £4.2bn to cover the possibility of business and personal customers failing to keep up with their loan payments.
Lloyds said that the expected credit loss allowance of £6.2bn still set aside remains “high by historical standards”. It assumes that a large proportion of expected losses will emerge over the next 12 to 18 months as support measures end and unemployment increases.
“The coronavirus pandemic continues to have a significant impact on people, businesses and communities in the UK and around the world,” said outgoing chief executive António Horta-Osório.
“Whilst we are seeing positive signs, notably the progress of the vaccine roll-out and the emergence from lockdown restrictions, the outlook remains uncertain. The group remains absolutely focused on supporting its customers and helping Britain recover from the financial effects of the pandemic.”