Lloyds Shares Shoot Up As Profit Rises

The chief executive of Lloyds has said the bank made "substantial progress" in the first quarter, as it reported a sharp rise in profit.

The bank, which is 39%-owned by the Government, said underlying profit hit £1.48bn in the first three months of the year - up from £497m a year ago.

It did not put aside any further provisions to cover the costs of mis-selling payment protection insurance, and bad loan charges fell over the period.

Lloyds' shares rose by 5% after the results were published, and by lunch time were over 4% higher.

Antonio Horta-Osorio becamse head of Lloyds Bank in March 2011

The bank also said it was pushing ahead with plans to float 630 of its branches, after a deal to sell them to the Co-operative fell through last week.

But it added that the bill for offloading the branches - which is already close to £1bn - was expected to hit £1.3bn.

Lloyds is being forced to sell off the network - known as Project Verde - by European regulators in return for the £20bn of state aid it received at the height of the 2008 banking crisis.

The bank said it cut costs in the first quarter by 6%, and expected to reduce costs to about £9.15bn in 2014 - a reduction of £2bn from 2010.

Lending returned to growth in the first quarter, the bank added, as demand from businesses increased.

The bank said lending to small and medium sized businesses was up by 4%, and it lent £1.5bn to over 13,000 first time buyers over the three month period.

Lloyd's boss Antonio Horta-Osorio, said: "We made substantial progress again in the first quarter.

"Underlying and statutory profits improved significantly, and our core loan book returned to growth earlier than expected.

"Margin increased, and costs and impairments continued to fall rapidly, with this progress underpinned by a further strengthening of our balance sheet."

He added that the bank is delivering "real benefits" to customers and shareholders, and was "further ahead" with its transformation plan.

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