LONDON ― British lender Lloyds Banking Group revealed on Wednesday a drop in profits as interest rates fell, adding that performance in the first nine months was also impacted by higher costs.
Profit after tax dropped 13 percent to 3.4 billion pounds ($4.4 billion), Lloyds said in a statement. It is the first of Britain’s major banks to update on performance in the earnings season, with Barclays, NatWest and HSBC to follow in coming days.
As central banks embark on cutting rates with inflation returning to lower levels, lenders are following suit causing them to lose deposits.
Lloyds on Wednesday added that net interest income declined 10 percent to 9.1 billion pounds in the nine months to the end of September.
Operating expenses increased to 8.1 billion pounds, offsetting a big drop in impairment charges.
Lloyds’ share price gained 1.8 percent at the start of trading, with the profit figure coming in better than analyst expectations.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that while there was “an ongoing shift toward higher-rate accounts” among savers, Lloyds’ update showed deposit migration was “not quite as much of a headwind as some had feared.”
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