Analysts broadly welcomed Lloyds (LON:LLOY) first quarter numbers, which showed a big rise in profits aided by lower bad debts and the benefits from a heavy cost cutting programme.
Shares in the state-controlled bank rose by more than 4% on the results, which came in above most analysts’ expectations, making it among the top five gainers on FTSE 100.
Underlying profits jumped to £1.5bn (from £497mln), while statutory profits jumped to more than £2bn as costs declined by 6% and bad debts dropped by £655mln.
Broker Investec said the market would be "encouraged" by a strong statutory result and signs of the modest growth in core business.
Analyst Ian Gordon says he particularly likes the small but positive “core” net lending increase of £0.6bn in the quarter.
"Management has also responded well to criticism of its 2013 cost guidance given just two months ago and improved it by £0.2bn to £9.6bn," he said.
Elsewhere, Numis described Lloyds' performance as "strong" as it reiterated its 'buy' call on the stock.
"Results were solid and despite the stock being strong into figures we expect it to perform well," added broker Credit Suisse, which has a 'neutral' stance.
Earlier, the bank's chief executive António Horta-Osório said it had been a quarter of substAntial progress with the loan book also returning to growth earlier than expected.
“Margin increased, and costs and impairments continued to fall rapidly, with this progress underpinned by a further strengthening of our balance sheet,“ he said.
The bank was making progress in its aim to revert back to a “simple, UK customer-focused retail and commercial banking model,” he added.
The bank is now targeting a further £200mln reduction in total costs to around £9.6billion in 2013, with total costs to be around £9.15bn in 2014, assuming a Project Verde flotation in mid-2014.
Talks to sell the Verde group of 632 branches to the Co-Operative Group collapsed last week and Lloyds said it would rebrand the branches as TSB and spin them off.