Lloyds Bank Share Price Fell 2.02% Despite a Jump in FY23 Profits

The Lloyds Banking Group PLC (LON: LLOY) share price fell 2.02% after its full-year 2023 earnings results were released. The company recorded a statutory profit after tax of £5.5 billion, with £1.2 billion generated in the last quarter, and a net income increase of 3% to £17.9 billion, alongside a minimal impairment charge. 

The return on tangible equity was impressive at 15.8%, dropping slightly to 13.9% in the final quarter. A considerable portion of profit growth can be attributed to earnings adjustment from adopting the IFRS 17 accounting standard in 2022.

The underlying net interest income rose 5% to £13.8 billion, with a net interest margin of 3.11%, meeting the forecasted figures. The banking net interest margin decreased slightly to 2.98% in the last quarter, a 10 basis point drop influenced by challenges in mortgage pricing and deposit composition.

However, this was somewhat offset by strategic hedging. As anticipated, the average interest-earning banking assets slightly declined to £453.3 billion in the last quarter of the year. Other underlying income increased by 10% to £5.1 billion, indicating a broad recovery in customer activities and continued investment in the business.

The total loans and advances to customers experienced a decrease of £5.2 billion, settling at £449.7 billion. This decline included the securitisation of £2.5 billion in legacy retail mortgages during the first quarter and £2.7 billion in unsecured retail loans in the last quarter. 

There was a slight reduction in customer deposits by £3.9 billion (1%) to £471.4 billion, encompassing an £11.3 billion drop in Retail current accounts. This was partially counterbalanced by a collective increase of £8.9 billion across Retail savings and Wealth accounts.

Charlie Nunn, Lloyds Banking Group Chief Executive, said: “In 2023, the Group remained focused on proactively supporting people and businesses through persistent cost-of-living pressures whilst financing their ambitions and growth. This has come alongside strong progress on our strategy and delivering increased shareholder returns, guided as always by our core purpose of Helping Britain Prosper. The Group delivered a robust financial performance, meeting our 2023 guidance, driven by income growth, cost discipline and strong asset quality. This performance enabled strong capital generation and increased shareholder distributions.”

Lloyds share price. 

The Lloyds share price fell 2.02% to trade at 42.365p from Wednesday’s closing price of 43.237p.