Lloyds Banking Group has predicted a pre-tax loss of £3.4 billion in the first quarter, despite continuing to make good progress with its IT and business integration programme.
It comes just few months after the bank reported an impressive turnaround in profit for its 2010 financial report, which was driven in part by cost savings achieved through consolidation of its IT.
In the Q1 2011 report today, the company said that it was making “continued strong progress” on the programme to integrate Lloyds TSB with HBOS (Halifax Bank of Scotland) following the merger of the two companies in January 2009.
It also said that the integration programme was delivering annual, extrapolated, cost savings of £1.57 billion at the end of March and that it was “on track” to deliver £2 billion of cost savings and other operating efficiencies by the end of the year.
However, these savings have been offset by the £3.2 billion provision the bank has been forced to make for compensating customers who were missold payment protection insurance (PPI), following a High Court ruling.
Lloyds said that it incurred one-off integration costs of £333 million in the first quarter of 2011, a 12 percent increase from December 2010, which brings the total cost of integration to £3.08 billion. This covers IT, business costs of implementation and redundancies.
The bank has so far cut 22,000 jobs in two years, according to trade union Unite’s figures, with the most recent reduction made in April of 325 back office jobs.