The capital position was also much strengthened, with the CET1 ratio rising to 15.2%
PLC () returned to profitability in the third quarter of 2020 as lower provisions for bad debts counterbalanced a continued shrinkage of income.
The UK’s biggest lender also said chairman Norman (Lord) Blackwell will step down at the start of next year and Robin Budenberg, who joined the board this month as a non-executive director, will take his place.
He will oversee one of the most digitally advanced of the big FTSE 100 bank, with 17.1mln active online banking and app users, while also possessing the UK’s largest branch network.
The lender generated net income of £3.4bn in the three months to end-September, down from £4.2bn the same period a year ago and roughly flat compared to the second quarter.
Costs were up slightly by quarter but down 4% on a year ago but impairments for bad loans resulting from the economic effects of the coronavirus pandemic were only £301mln compared to £2.4bn in the second quarter and £1.4bn in the first.
This reduction in impairments, which Lloyds said reflected “the relative economic stability and impact of support measures” in the UK, enabled the group to report a statutory profit before tax of £1.04bn.
The capital position was also much strengthened, with the CET1 ratio rising to 15.2% from 14.6% over the three months and 13.8% at the start of the year.
While acknowledging that the outlook “remains highly uncertain” as the country succumbs to a second wave of COVID-19 but noting that mortgage activity is “picking up strongly” and it has been winning new retail accounts ahead of the market, Lloyds raised its guidance for the full year: impairments are now expected to come in the lower end of the £4.5-5.5bn range and risk-weighted assets and net interest margin are expected to be broadly stable.