Pre-tax profit for the third quarter fell by 36% to £1.17 billion, though this surpassed analyst expectations of £1.04bn. The decline was driven by total costs swelling 37% to £3.18bn, which included an £800 million charge for the motor finance issue. This brings the bank’s total provision for the scandal to £1.95bn. For comparison, Barclays announced that its provision stood at £325m.

Despite the significant charge, the bank’s underlying performance remained resilient. Underlying net interest income – a key measure of profitability – was slightly ahead of forecasts at £3.45bn. Lloyds has updated its full-year guidance for this metric to around £13.6bn.

Charlie Nunn, group chief executive, expressed confidence, stating that “strong capital generation was supported by income growth, cost discipline and strong asset quality” during the first nine months of the year.

Analysts acknowledged the impact of the provision, with Richard Hunter of Interactive Investor calling it a “quarter to forget” that played “havoc with many of its key metrics”. However, he noted that the provision is not “life-threatening” and that “underlying progress remains strong”.

Mr Hunter also highlighted potential future risks, describing Lloyds as a “barometer for the UK economy” that could face “choppier waters ahead” if the economic backdrop worsens. He added, however, that the threat is considered manageable.

The market reacted calmly to the news, with Lloyds’ shares remaining almost flat in early trading. The stock has risen 54% year-to-date and over 1% in trading today.