TSB sale hits Lloyds profits

Edinburgh-based Lloyds Banking Group made a £1.2bn profit in the first three months of 2015 -an 11 per cent fall year-on-year from the £1.4bn recorded in the first quarter of 2014.

The still partly state-owned lender said the fall had come as a result of a £660m loss incurred on the sale of TSB.

Lloyds was forced by the European Commission to sell or spin-off TSB as part of the conditions of its £20 billion 2008 government bailout.

TSB floated on the stock market in 2014.

The bank’s Q1 results, published today, show Lloyds agreed to pay £450m for TSB’s IT migration costs after accepting a takeover bid by Spanish bank Banco de Sabadell in March.

In a statement accompanying its results, Lloyds said: “We agreed the sale of our remaining stake in TSB to Banco de Sabadell in the first quarter and as part of this agreement, we sold 9.99 per cent of our stake in March.

“The full disposal of TSB will enable us to meet our commitment to the European Commission ahead of the mandated deadline.”

With the cost of the TSB sale aside, Lloyds’ results showed its underlying profit increased by 21 per cent year-on-year to £2.2bn and group chief executive Antonio Horta-Osorio said there had been “continued improvement in financial strength”.

The bank also said there had been no further provision during the quarter to cover the mis-selling of PPI products.

Mr Horta-Osorio added: “We have made a strong start to the next phase of our strategy to become the best bank for customers and shareholders, as we continue to support and benefit from UK economic growth.

“I am pleased with the continued improvement in financial strength and performance in the first quarter and expect our plan to deliver sustainable growth and improved returns.

“It also remains our intention to pay an interim and a final dividend for 2015.”