LONDON (Reuters] – The largest UK mortgage lender, Lloyds Banking Group, reported higher profits than expected for the first three months. It was largely unaffected by the country’s growing cost of living crisis.

Pre-tax profit for the bellwether bank was 1.6 billion pounds (2.01 billion) in quarterly reports. This is a decrease from the 1.9 billion reported last year, but it’s still higher than the 1.4 billion pound median of analyst forecasts that the bank has compiled.

Bank finances saw a boost last year due to the recovery from COVID-19 Pandemic Lockdowns, and Bank of England raising interest rates from their historic lows.

The outlook has been threatened however by an escalating inflation, partly due to the economic shockwaves caused by Russia’s invasion Ukraine.

Charlie Nunn, chief executive of the bank, stated that while we see continued recovery from coronavirus, “the outlook for the UK’s economy remains uncertain, especially with regard to the persistence and impact on higher inflation.”

Lloyds (LON 🙂 claimed that even though there was economic uncertainty, it had a strong underlying performance and could improve its return on tangible equity as well as net interest margin. These are key indicators of profitability.

Lloyds expects the banking net interest margin this year to rise to 270 basis point from 260 base points. It also anticipates a higher than 11% return, as opposed to the 10% goal set in February.

Contrast with HSBC which had to abandon plans for new stock purchases in its earnings report on Tuesday, the lender’s results are quite different.

($1 = 0.7945 pounds)