Lloyds' Outlook Has Stabilised Significantly
Lloyds has historically been a very efficient operator and we're eager to see shareholders benefit from HBOS synergies
Lloyds said its improvement in profitability came principally from a reduction in loan losses in its wholesale business. We're glad to see that loan losses are not continuing to grow and, in the absence of a steep decline in the UK economy, we think loan losses peaked in late 2009. Lloyds also posted wider net interest margins as it was able to expand its low-cost deposit base during the quarter and earn higher spreads on credit. Although loan balances were flat and noncore portfolios continued to run off, Lloyds said interest income increased overall as the bank benefited from higher margins. Lloyds also reported that it is on track to deliver the projected £2 billion of annual synergies from the HBOS merger. Lloyds has historically been a very efficient operator, and we're eager to see the benefit of these synergies flow to shareholders.


