Britain's Lloyds reports Q3 profit beats expectations

(Corrects profit in second paragraph to 2 bln pounds, not 1.6 bln)

LONDON (Reuters) – Lloyds Banking Group posted a better than expected profit for the third quarter as Britain’s economy rebounded from pandemic lockdowns, in Chief Executive Charlie Nunn’s first set of earnings at the bellwether bank.

Britain’s biggest mortgage lender posted pretax profits of 2 billion pounds ($2.20 billion) for the July-September period, compared to 1.3 billion pounds in an average of analyst forecasts. The lender reported a 1 billion pound profit in the same period last year.

Like rivals Barclays and HSBC, Lloyds’ results were boosted by the release of a chunk of cash – 84 million pounds – it had set aside for bad loans last year when the economic outlook looked gloomier.

The bank said that given its strong performance and an improved outlook for the economy, it was improving its guidance for this year. The bank now expects loan impairments to be a net credit for the year, and its return on tangible equity – a key measure of profitability- to be over 10%.

Nunn, a former HSBC veteran, took the helm at Lloyds in August, replacing long-standing boss Antonio Horta-Osorio who left earlier in the year to chair crisis-hit Credit Suisse.

Nunn inherits a bank placed on an even keel by his predecessor, but faces a challenge to improve returns amid near-zero benchmark interest rates and intensifying competition from digital rivals.

“There are clearly significant opportunities for Lloyds Banking Group to further develop its platforms and capabilities and grow,” Nunn said.

($1 = 0.7277 pounds)

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