Lloyds (LON:LLOY) first quarter pre-tax profit has been almost completely wiped out by a £1.4bn provision for the increased macro uncertainty due to the COVID-19 pandemic.
Lloyds statutory pre-tax profit fell to £74m, considerably lower than the £1.6bn reported in the first quarter of 2019.
Lloyds shares were down as much as 4% in the first hour of trading on Thursday.
Just as Lloyds cut their dividend inline with other UK banks in April, Lloyds followed in the steps of other UK banks by saying their would be no consideration given to resuming dividends until the end of 2020.
UK banks scrapped dividends in April to help preserve cash for the possibility of a prolonged economic downturn, despite the banks having much stronger balance sheets than they did in the financial crisis.
Although Lloyds reported a sharp drop in profits, the bank said the company’s operations had been resilient to the spread of COVID-19 with around 90% of their branches remaining open.
In statement attached to the first quarter results, CEO António Horta-Osório highlighted Lloyds’ strong balance sheet and how this will be used to facilitate the UK economy.
“The coronavirus pandemic presents an unprecedented social and economic challenge which is having a significant impact on people and businesses in the UK and around the world. The economic outlook is clearly challenging with the longer- term outcome dependent on the severity and length of the pandemic and the mitigating impact of Government and other measures in the UK and across the world,” said António Horta-Osório, Group Chief Executive
“Throughout this period of uncertainty we will continue to work closely with Government, regulators and other authorities and use the strength of our balance sheet and business model to ensure that we play our part in supporting our customers and the UK economy.”
“I would like to pay tribute to the exemplary dedication being shown by all our colleagues across the Group providing vital banking services to those in need, but also in going above and beyond in countless and often unseen ways to support the most vulnerable.”
