Lloyds Q3 profit falls on 800m provision for unlawful car finance

Lloyds Banking Group on Thursday reported a 36 percent fall in third quarter pretax profit to 1.2 billion pounds, saying the decline was driven by an additional 800 million pounds set aside to compensate customers affected by an unlawful car finance commissions practice. The bank reported the quarter to the end of September and said the results nonetheless beat the roughly 1 billion pounds that many analysts had expected.

Beneath the one-off charge, Lloyds said underlying net interest income rose 7 percent to 3.45 billion pounds and the net interest margin widened by 11 basis points from a year earlier to 3.06 percent for the quarter. Underlying impairment charges were modestly higher at 176 million pounds, up 2 percent year on year. The group raised its full-year net interest income outlook to about 13.6 billion pounds from previous guidance of 13.5 billion. Excluding the motor finance provision, Lloyds said return on tangible equity would be around 14 percent, up from a prior 13.5 percent estimate.

The extra provision increased Lloyds total expected compensation related to the motor finance issue to about 1.95 billion pounds. Britain's financial regulator has proposed an...