THAT Charlie Nunn was upbeat when delivering Lloyds Banking Group’s results for the first half of the year to June 30, 2024, is not surprising – although the chief executive can’t hide the fact that the group’s pre-tax profit of £3.3 billion in the first six months of the year is down 14%.

The Bank of Scotland owner revealed that earnings fell as it generated less income despite borrowing costs remaining higher. Its net interest income, which is the amount it generates from loans minus what it pays out on savings, fell by one-tenth year on year.

Lloyds, which also owns Halifax and Scottish Widows, is the UK’s largest mortgage lender and was one of several banks that booked record profits last year, boosted by higher interest rates allowing lenders to charge more for loans. So, this year’s performance chimes with a broader slowdown in the market and is to be expected – although it should be noted that the results were better than some analysts anticipated.

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The group said that earnings fell as it generated less income despite borrowing costs remaining higher. Its net interest income, which is the amount it generates from loans minus what it pays out on savings, fell by one-tenth year on year.

However, Mr Nunn described the results for the first half as “robust” with “solid income performance and cost discipline alongside strong capital generation”. Noting that 2024 is “a key year for our strategic delivery”, he added: “We remain on track to meet our 2024 targeted outcomes.”

At wealth manager RBC Brewin Dolphin, senior investment manager Zoe Gillespie, said: “Although profits have fallen, Lloyds’ results are broadly in line with expectations. The bank’s net interest margin was always going to come under pressure from peaking interest rates and competition, so [the] reduction comes as little surprise.”

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Matt Britzman, senior equity analyst at Hargreaves Lansdown, pointed to an improved economic outlook for the UK driving Lloyds’ better-than-expected profit performance, as impairments came in below expectations. He added: “Lloyds grew the loan book over the period, with a slight uptick in new mortgages. These still aren’t as profitable for the banks as they have been in the past, but it’s a good sign that demand’s coming back.”

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The bank also revealed that its balance sheet grew, with the amount it lent to customers increasing by £2.7bn. Customer deposits also increased over the period, with an additional £4.9bn put into savings and current accounts.

Looking to the full year outlook, Lloyds said it is “on course” to deliver cost-savings of about £1.2bn by the end of the year and meet its strategic target of unlocking about £700 million of additional revenues for 2024.

It also remains to be seen if the Bank of England cut interest rates as slated on August 1.