Lloyds Banking Group improved its performance outlook for 2023 after reporting a 23% increase in first-half profit, despite pressure on banks to offer greater benefits of rate rises to savers facing a cost-of-living squeeze.
Britain's biggest mortgage lender reported pre-tax profit of £3.9 billion for the six months to June.
This was up on £3.1 billion the prior year and slightly below the £4 billion average of analyst forecasts compiled by the bank.
Lloyds reported an improved interim ordinary dividend of 0.92 pence per share, up 15% on the prior year and equivalent to returning £594m to shareholders.
The increased profit meant Lloyds could lift its performance outlook for the year. It now expects return on equity to be greater than 14% this year rather than 13% previously guided.
Lenders have faced mounting pressure from politicians, regulators and consumer groups to pass on more interest to depositors following a long run of Bank of England rate rises, particularly as the cost of mortgages has risen at a much faster pace.
Higher central bank rates have helped banks report bigger profits in recent quarters, as they make money on the widening gap between what they charge on lending and pay out on savings - leading some lawmakers to accuse banks of "profiteering".
Lloyds CEO Charlie Nunn said that he recognised cost of living pressures were "proving challenging" for customers, but said the bank was proactively supporting customers and was offering higher savings rates.
The bank's net interest margin - a key measure of profitability - came in at 3.14% in the April-June quarter, slightly down on 3.22% in the first three months of the year.
The bank said it expected this to fall more slowly than previously forecast, dipping to 3.1% this year instead of 3.05%.
Lloyds says it won't 'rush' into sale of Telegraph newspapers
Lloyds' CEO Charlie Nunn said the bank would not rush into a sale of the Telegraph newspapers, after the lender's shock move to take control of the politically influential publications last month.
Lloyds seized control of the parent company of the Daily and Sunday Telegraph and political magazine The Spectator after a long-running dispute with their former owners the Barclay family over debts secured against the businesses.
The debts run to more than £1 billion, according to media reports.
The bank has appointed receivers at Alix Partners to prepare the businesses for sale, a process expected to face close regulatory and competition scrutiny with the prospect of an election in Britain next year.
"The good news from our perspective is the Telegraph and the Spectator are well-performing businesses, there's no need to have a rushed sales process here," Nunn told reporters after the bank's half-year results today.
Nunn said the titles were being managed independently from Lloyds and the lender was not involved in decision-making around the sales process, adding he was unconcerned if the sale did not take place before an election.
Some senior Conservatives have publicly warned Lloyds to conduct a sale quickly and transparently, the Telegraph has reported.
"My expectation, for what it's worth, is there'll be a lot of interest in the Telegraph and it's a process that will run relatively quickly, but I don't have any concerns, because I have no oversight," Nunn said.
"That's absolutely right given my role and obviously the important role the Telegraph plays in UK society."
Telegraph Media Group yesterday posted a rise in subscriptions and profit in 2022 and said it was on track to meet its target of 1 million subscribers by the end of the year, boosted by the takeover of Chelsea Magazine Company in March.
Nunn said that the parent company's debts had been in remediation for more than 10 years, pre-dating his arrival at the bank, and he had believed it was the "right time" to take action to try to recover value for shareholders.
