Lloyds (LLOY.L) reported a slight dip in profits in the third quarter but still beat estimates, with the bank reiterating its full-year guidance.
Profit before tax for the third quarter came in at £1.823bn ($2.36bn), which was 2% lower than the same period last year.
However, this came in ahead of consensus estimates of £1.622bn, according to figures supplied by the bank.
Shares in the bank were up nearly 2% on the back of the release of the results on Wednesday morning.
Speaking on a conference call on Wednesday, William Chalmers, group chief financial officer for Lloyds Banking Group, said the bank had “continued to see increased confidence in customer activity.”
In addition to an increase in savings balances, Chalmers said that there had been a “material increase” in non-essential spending by customers over the first nine months of the year.
Underlying net interest income, the gap between what it pays out to savers and borrowers in interest, fell 6% in the third quarter to £3.2bn.
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The bank posted a 2% rise in operating costs to £2.3bn in Q3, compared to the same period last year.
Lloyds said lower impairment charges, which refers to the reduction in value of assets, helped offset higher operating costs. Impairment costs came in at £172m for the third quarter, down from £187m for the same period last year and were lower than the £271m expected in consensus estimates.
The bank reaffirmed its guidance for 2024, expecting operating costs of around £9.4bn and guided to a return on tangible equity of 13%.
Charlie Nunn, group chief executive of Lloyds Banking Group, said: “The group delivered a robust financial performance in the third quarter of 2024, with growth in income alongside continued cost discipline and strong asset quality.
“As mentioned during our half-year 2024 results update, we are making good progress on our strategy and remain on track to deliver higher, more sustainable returns.”
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In the second quarter, the bank delivered pre-tax profit of £1.7bn, which was higher than the £1.6bn it generated in Q2 2023 and beat market expectations of £1.58bn.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “In tune with recent trends, impairment charges were better than expected and drove a good chunk of the pre-tax profit beat, as borrowers continue to stand firm.
“The decent margin performance and lower impairments should be a good read-across for names like NatWest and Barclays.”