Lloyds Quarterly Profit Falls 11% To £1.2bn

Lloyds Banking Group has announced an 11% fall in pre-tax profits in its first quarter to £1.2bn, with a £660m loss attributed to its sale of TSB blamed.

The bank, which is now almost 21% owned by the taxpayer after Government share disposals, said its underlying profits rose 21% to £2,2bn.

It credited the UK's economic recovery and a significant fall in the amounts it has previously had to set aside to cover the costs of past mistakes.

It made no new provisions for the cost of mis-selling payment protection insurance (PPI) and total impairments for the quarter came in at £177m, down 59% on the same period last year.

On the issue of legacy costs, the figure announced by Lloyds compare favourably to those detailed earlier this week by rivals Barclays (LSE: BARC.L - news) and RBS (LSE: RBS.L - news) , which both booked hefty sums to cover regulatory action.

The bank spun off TSB in 2013 - a move forced on it by regulators because of the state bailout aid it received in 2008.

Lloyds agreed in its first quarter the sale of its remaining 40% stake to Banco de Sabadell, which is on course to take full control of TSB , and the loss it announced on Friday related mostly to IT platform transfer costs.

Lloyds said it was fully focused on delivering sustainable growth.

Chief executive Antonio Horta-Osorio said: "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."

The growth in its underlying profits meant Lloyds still planned to pay dividends this year, the bank said.

Its share price rose 3% when the FTSE 100 began trading on Friday.

The recovery in its share price in recent years has allowed the Treasury to sell off, at a profit, half the stake the taxpayer took in the bank.