LONDON, Oct 29 (Reuters) - Lloyds Banking Group posted forecast-beating third quarter profit on Thursday, lowering its provisions for expected bad loans due to the pandemic and cashing in on a boom in demand for mortgages.
Britain’s biggest domestic lender reported pre-tax profits of 1 billion pounds ($1.3 billion) for the July-September period, compared to the 588 million pounds average of analysts’ forecasts.
The bank booked new mortgage lending of 3.5 billion pounds over the quarter, after receiving the biggest surge in quarterly applications since 2008.
Lloyds set aside a further 301 million pounds to cover expected customer loan defaults, less than half the 721 million pounds analysts had expected.
Like its rivals, Lloyds’ profits have been squeezed this year by provisions for expected bad debts due to the coronavirus crisis and rock-bottom interest rates.
But echoing HSBC and Barclays results in recent days, Lloyds beat market forecasts after setting aside a smaller sum for loan defaults in the third quarter.
The bank said it expects loan loss provisions for the full-year to be at the lower end of the 4.5 billion pound to 5.5 billion pound range previously given.
The bank’s core capital ratio, a key measure of financial strength, increased to 15.2%, compared to 14.6% prior.
($1 = 0.7673 pounds)
(Reporting by Iain Withers and Sinead Cruise, editing by Rachel Armstrong)