Lloyds to tweak methods for reporting funding costs, capital


LONDON–Partly nationalized British bank Lloyds said it would change the way it reports funding costs and capital, resulting in a slightly higher banking net interest margin target for this year but not impacting overall group earnings numbers.

Lloyds said the changes would mean that net interest income within its core banking divisions would increase slightly, while there would be a slight reduction for net interest income in other non-banking areas. The net interest margin represents the gap between what a bank charges for loans and what it pays to borrow. Lloyds added it now expected the net interest margin at its banking operations to be just above 2.05 percent in 2011 — a slight rise from the company’s previous target of just above 2 percent. “The new changes are not price sensitive,” said Oriel Securities analyst Mike Trippitt. Lloyds said any impact on results would be at a divisional rather than a group level. “The group’s combined businesses and statutory results are unchanged as a result of the new transfer pricing methodologies,” Lloyds said in a statement on Tuesday. In August, Lloyds said its half-year net interest margin shrank to 2.07 percent from 2.12 percent a year earlier as the bank reported an overall interim loss of 3.25 billion pounds (US$5.2 billion).