Total income hit £9.5bn in the first half, 2% ahead of the same period last year. With operating costs broadly flat and fines for poor conduct falling, the bank reported underlying profit growth of 7%, reaching £4.2bn. Lower PPI claims meant reported profits jumped after tax jumped 38% to £2.3bn.
The interim dividend has increased 7% to 1.07p per share.
The shares rose 1.8% in early trading.
Exciting Lloyds is not. But income growth and a chunky dividend - analysts are forecasting a prospective yield of 5.5% - are not to be sniffed at.
Performance is being driven by more loans to customers, at higher margins and with lower operating costs - in essence doing simple banking well. CEO Antonio Horta-Osorio's plan for the next three years calls for more of the same.
Lloyds is already the UK's biggest digital bank, as well as operating the largest branch network. Further digitalisation aims to improve customer service and reduce costs.
The group is making a land grab into Financial Planning and Retirement as well - aiming for £50bn+ of new assets and 1m new clients by 2020. The Scottish Widows business means it already has a foot in the door and early signs are good, with assets under administration rising 14% to £9bn in the first half. But expansion will still require significant investment.
Small business lending is also getting a shot in the arm, with management targeting an extra £6bn of net lending by 2020.
All this, together with a significant investment in staff, is expected to cost around £3bn. But if Lloyds can pull it off, the rewards could be substantial.
The bank's already market leading cost to income ratio should continue to fall, reaching the low 40s by 2020, with improvements every year. Loan defaults are also expected to remain low.
If all goes to plan, return on equity should hit 14-15% (versus 8.9% in 2017) with capital generation of 1.7-2 percentage points a year. For shareholders that should mean a sustainable and growing dividend, with potential for further returns of surplus capital.
It's worth bearing in mind that regulatory or economic curveballs can upset the apple cart with banks. Lloyds is particularly exposed to the fortunes of the UK economy, with increasing exposure to more volatile credit card and car finance markets. With concerns about a painful Brexit weighing on the economy that's not ideal - and might explain the group's undemanding valuation.
However, it's difficult to see where the bank has put a foot wrong so far. Horta-Osorio's two previous three year plans have taken the bank from financial crisis pariah to one of the strongest players on the high street.
It might lack fireworks, but if his next offering delivers more of the same, there won't be many complaints.
Half Year Results
Income growth was driven by a 7% increase in net interest income, to £6.3bn, which itself was the result of a 0.11 percentage point improvement in net interest margins to 2.93%. Loans to customers remained unchanged.
That performance was partially offset by a 7% fall in other income, which stood at £3.1bn, as changes to overdraft rules in the retail bank dented performance.
Lloyds' cost to income ratio fell 4.2 percentage points to 47.7%, as income growth and a 52% decline in conduct charges boosted performance. Excluding costs associated with the acquisition of the MBNA credit cards business and investment in digitisation, underlying costs fell 7%.
Impairments for bad loans jumped 70% to £456m, with the increased impairments reflecting the purchase of MBNA credit cards last year. On an underlying level mortgages, consumer finance and commercial and saw credit conditions remain unchanged or improve.
The group made a total provision for PPI claims of £550m in the half, including £460m in the second quarter - assuming 13,000 claims per week, up from 11,000.
Lloyds generated 1.21 percentage points of CET1 capital (a standard measure of banking capitalisation) in the half, closing the period with a CET1 ratio of 15.1%, or 14.5% after accounting for dividends.
Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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