The bank’s profit before tax jumped 23% to £1.6bn compared to the same period in 2017, and underlying profit increased by 6% to £2bn.
A fall in costs relating to Payment Protection Insurance (PPI) helped lift the bank’s results, as did the income from the acquisition of the MBNA credit card book.
Adverse credit signals
However, the amount of bad loans at the lender jumped to £258m in the first quarter, compared with £127m in the same period last year.
The bank declined to detail mortgage lending growth or figures, but reported an open mortgage book of £267bn, which it said remained in line with the year end of 2017.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Lloyds has made a good start to 2018, thanks to a growing top line and lower PPI costs.
“Rising interest rates are positive for the banking sector, and Lloyds is also benefitting from the purchase of the MBNA credit card portfolio, as this kind of debt yields significantly more for banks than mortgage borrowing, albeit with greater risk.
“That said, bad loans remain well contained at Lloyds, as unemployment and interest rates are near historical lows, which means most people are able to service their debts adequately.”
António Horta-Osório, Lloyds chief executive, appeared upbeat about the prospects for 2018.
He said: “The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth.
“Asset quality remains strong with no deterioration seen across the portfolio.
“We expect the economy to continue to perform along these lines during 2018.”