London: Lloyds Banking Group Plc, Britain’s largest mortgage lender, said profit was little changed in the first quarter as revenue and costs both dropped 1 per cent.

Pretax profit, excluding one-time items and its previously owned TSB banking unit, dropped to £2.05 billion (Dh10.9 billion) from £2.06 billion a year ago, the London-based bank said in a statement Thursday. That beat the £2-billion average estimate of four analysts surveyed by Bloomberg.

Chief Executive Officer Antonio Horta-Osorio is under pressure to intensify cost cutting to boost profit as the Bank of England keeps interest rates at a record low amid concerns over slowing economic growth. The government is looking to sell its remaining 9.2 per cent stake in Lloyds after the bank paid a bumper dividend for 2015 and signalled the end of charges for wrongly sold payment protection insurance that have cost the lender more than £16 billion.

“We have continued to make good progress,” Horta-Osorio, 52, said in the statement. The results “reflect our ability to actively respond to the challenging operating environment.”

Net income, including tax and a charge linked to the bank repurchasing contingent-capital bonds, fell to £531 million from £944 million a year earlier. Net interest margin jumped to 2.74 per cent, up 14 basis points from a year earlier.

Financial crisis

The stock has fallen about 5 per cent this year for the second-best performance among major British lenders. But, it remains below the 73.6 pence average price the UK paid in its £20.5-billion bailout of the bank at the height of the financial crisis. The government postponed the sale of its stake in Lloyds in January amid a turbulent market, pledging to offer stock to consumers when conditions improve.

Lloyds’ common equity Tier 1 capital ratio, a measure of financial strength, fell to 12.8 per cent from 13 per cent at the end of December, while the leverage ratio, or assets in relation to capital, dropped to 4.7 per cent from 4.8 per cent.

The lender set aside £115 million for “retail conduct” matters, though the bank didn’t make additional provisions for improperly sold loan insurance, where the complaints were in line with the bank’s expectations, Lloyds said.

Impairments fell 6 per cent to £149 million, helping to offset the decline in revenue.