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Lloyds Banking Group announced today a 28 per cent decline in its pre-tax profits to £1.6bn for the first quarter. Its quarterly revenues also dipped to £4.2bn, landing just below market expectations of £4.3bn.
The bank said its net interest margin, the difference between the interest it charges on loans and the rate it pays on deposits, fell to 2.95 per cent from 2.98 per cent in the previous quarter. Additionally, it cited higher operating costs, including a new Bank of England levy on lenders and £100mn in costs to cover employee severance packages in a recent round of layoffs.
Despite stating its expectations of an average net interest margin of 2.9 per cent for the year, in line with analyst predictions, Lloyds faces challenges from increasing competition in savings and mortgage markets, alongside expectations of rate cuts, which have compressed interest margins.
The bank’s total lending and customer deposits also saw declines, with lending dropping by £1.2bn to £448.5bn and deposits decreasing by £2.2bn, as consumers transferred funds to other savings accounts amid stiff industry competition.
However, Lloyds highlighted the stability of its credit quality, noting fewer arrears and defaults compared to the previous year. The bank allocated £57mn to cover bad loans, significantly lower than the £243mn set aside in the same period last year, reflecting an improved economic outlook for 2024.
In its previous quarterly results released in February, Lloyds set aside £450mn to address costs related to the Financial Conduct Authority’s probe into the potential mis-selling of motor finance loans. In today’s results, the bank disclosed no further charges related to this probe, as it awaits further guidance from the FCA in September.
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JPMorgan CEO Jamie Dimon painted a picture of a resilient US economy during a recent interview at the Economic Club of New York, labelling it as “booming”, as he attributed its strength to healthy consumer finances backed by strong employment figures.
Despite his optimism, Dimon expressed caution regarding the economy’s potential for a “soft landing”, stating, “We’re in pretty good shape and so far it looks like that soft-landing type of scenario. But put me on the cautious side of that one.”
Dimon also addressed geopolitical tensions, expressing surprise at oil prices’ resilience amid the potential for escalating global conflict. With oil trading at $88 a barrel, he highlighted the risks of attacks on energy infrastructure, warning, “It doesn’t take a lot to send oil and gas prices back to $120 or higher.”
Discussing political matters, Dimon dismissed suggestions of a presidential candidacy but advocated for greater business representation in government. He urged the next president to appoint cabinet members from opposing parties.
JPMorgan has consistently declined to comment on speculation about Dimon joining the US government, reiterating that Dimon has no plans to run for office. Nevertheless, Dimon’s name has frequently been suggested for senior economic roles and he has previously hinted that he would be open to a political career once he steps down as JPMorgan’s CEO.
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Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, should serve a 36-month prison sentence after pleading guilty to money laundering violations, according to a statement from US prosecutors in a court filing on Tuesday.
Zhao, who is expected to be sentenced on April 30 in Seattle, stepped down as Binance’s CEO last November, when he and the exchange admitted to failing to maintain an effective anti-money laundering programme, and agreed to a $4.32bn penalty.
US authorities have said that Binance failed to report over 100,000 suspicious transactions involving designated terrorist groups including Hamas, al-Qaeda and Isis. Furthermore, prosecutors allege that Binance’s platform facilitated the sale of child sexual abuse materials and received a significant portion of ransomware proceeds.
Although federal guidelines set a maximum 18-month sentence, US prosecutors argued for the extended sentence, citing the severity of Zhao’s deliberate breaches of US law and their consequences. Zhao had agreed not to contest any term up to that length. He is currently free in the US on a $175mn bond.
Zhao, also known as CZ, agreed to pay $50mn and sever ties with Binance, which he founded in 2017. The penalty against Binance includes a $1.81bn criminal fine and $2.51bn in restitution.
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Russia’s state-controlled Sberbank has announced plans to distribute Rbs752bn ($8.1bn) in dividends, representing its largest-ever payout following its record profit in 2023. The dividend, constituting half of last year’s Rbs1.5tn profit, is a sign of the health of Russia’s banking sector despite ongoing western sanctions.
Half of Sberbank’s dividend payout, amounting to Rbs375bn, will directly contribute to the Russian budget, given the state’s majority 51 per cent ownership of the bank. This injection of funds aligns with the Russian government’s budgetary projections for the year, providing additional resources to support Vladimir Putin’s ongoing war in Ukraine.
Despite being isolated from the world’s capital markets, Russian lenders have benefited from a surge in government-subsidised mortgages and corporate lending as the country’s shift to a wartime economy has boosted demand for funding.
