Lloyds (LLOY.L) reported a 28% drop in its first quarter profits as the lender was hit by stronger competition in the mortgage market.
The bank announced a pre-tax profit for the first quarter of £1.6bn ($1.99bn), down from £2.3bn a year ago.
It came in slightly below forecasts with analysts expecting a quarterly profit of £1.7bn.
Lloyds said the decline was driven by lower net interest income — the difference between what it generates from loans and pays out for deposits — and higher business costs.
Net interest margin, a closely-watched measure of profitability, edged down to 2.95% from 2.98% at the end of the fourth quarter and 3.22% a year ago. Underlying net interest income fell 10% to £3.2bn.
Its margins have narrowed into 2024 amid intense competition for mortgages and deposits, and the expectation that rate-setters will make multiple cuts this year.
Furthermore, earnings per share decreased by 0.6 pence to 1.7 pence, and the CET1 ratio reached 13.9%. Operating costs jumped 11% to £2.4bn.
