--Lloyds Banking Group posted a significant rise in pretax profit for the third quarter

--The U.K. bank reported lower than expected impairments in the period and slightly better net income

--Lloyds shares rose after the results

By Sabela Ojea

Lloyds Banking Group PLC reported Thursday a significant rise in profit for the third quarter of the year, beating market views on net income and impairments for the period.

The U.K.'s largest retail bank posted a pretax profit of 1.04 billion pounds ($1.35 billion) for the third quarter compared with GBP50 million for the same period a year earlier, when it booked a GBP1.80 billion provision. The lender posted a pretax loss of GBP676 million in the second quarter of the year.

It took an impairment charge of GBP301 million, down from the GBP2.39 billion and GBP1.43 billion impairments it booked in the second quarter and first quarter of the year respectively due to the coronavirus pandemic.

Pretax profit had been expected to amount to GBP588 million, while impairments were anticipated to reach GBP721 million, according to the bank's own compilation of forecasts. The bank now expects to book an impairment charge for the full year at the lower end of the GBP4.5 billion to GBP5.5 billion range.

Chief Executive Antonio Horta-Osorio said the bank was seeing an encouraging business recovery, although the coronavirus pandemic continued to affect its results.

The FTSE 100 bank's net income fell to GBP3.40 billion compared with GBP4.19 billion for the same period a year earlier. It was expected to fall to GBP3.37 billion.

Lloyds' common equity Tier 1 capital ratio --a measure of a bank's financial strength-- stood at 15.2%, up from 13.8% as at Dec. 31, 2019. It was anticipated to reach 14.4%.

Costs of GBP1.94 billion were higher than market expectations of GBP1.91 billion, according to the bank's consensus.

Regarding its mortgage book lending, Lloyds said that it increased by GBP3.5 billion in the quarter thanks to the market recovery and new business.

However, it also said that its closed mortgage book continued to reduce, as expected, with credit card and motor finance balances also lower, mainly due to reduced customer activity in the second quarter.

Shares at 0853 GMT were up 0.82 pence, or 3.0%, at 28.48 pence.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

10-29-20 0521ET