Lloyds braces for Brexit and margin squeeze with job cuts and closures

This will involve shedding a further 3,000 jobs and closing 200 branches by the end of 2017. Management also intends to generate savings by reducing its non-branch property portfolio by around 30 per cent by the end of the following year. The aim is that these measures will help slice an extra £400m off the bank's costs, bringing its savings target up to £1.4bn by the end of 2017. The bank has already shaved £600m from costs.

Gains made on the sale of the bank's stake in Visa Europe and a substantial reduction in conduct provisions helped boost statutory pre-tax profits. However, underlying profits were 5 per cent lower, as income fell and impairments increased by more than a third to £245m. As its retail bank tries to continue to protect its margins in a competitive environment, its open mortgage book declined marginally. While this was partly countered by a 5 per cent reduction in staff numbers, the business's net interest margin fell to 2.23 per cent from 2.25 per cent a year earlier.

The commercial banking operation put in a better performance as reduced funding costs and growth in higher quality deposits pushed up its net interest margin by 33 basis points to 3.18 per cent. In the consumer finance division management has focused on driving sales through digital channels. Its Black Horse motor finance lending platform grew its balances by almost a third to more than £10bn, while consumer credit card balances grew 4 per cent. However, net interest margins for the business were squeezed by repayment of historic higher-margin business, falling 69 basis points to 6.27 per cent.

Analysts at UBS expect tangible net asset value per share of 56.1p at the end of December 2016, from 51.7p a year earlier.