Lloyds Banking Group has reported a £2.1bn underlying profit during the first quarter - up from £558m a year ago - helped by the reversal of previously expected bad loan losses of £459m.
The first quarter figures showed a net impairment credit of £323m, compared with a £1.4bn charge in the first quarter of last year.
Revenue fell by 7% year-on-year to £3.7bn, although this was better than analysts had predicted.
The group stated that it now expects the UK economy to bounce back with 5% growth in 2021, up from previous expectations of a 3% expansion, while it predicted that unemployment will peak at 7%, not 8%.
Its outlook for the full year has also been upgraded on a range of measures, including net interest margin.
Lloyds experienced its best month for mortgages since 2008 in March, as the housing market was spurred on in part by the stamp duty holiday. Its mortgage book increased by 6% year-on-year to £283.3bn.
The group now expects the mortgage market to grow at a slower pace once the stamp duty break ends in June, although it added that the housing market should continue to be buoyed by changes in buyer demand due to the pandemic.
Lloyds reiterated that it would “resume its progressive and sustainable ordinary dividend policy with the dividend at a higher level than 2020” and is hopeful that regulators will return the policy control to boards for the interim payout.
Chief executive Antonio Horta-Osorio is leaving his position later this month to become chairman of Credit Suisse, replaced by Charlie Nunn, HSBC's former global head of wealth and personal banking.
Horta-Osorio said: “The coronavirus pandemic continues to have a significant impact on people, businesses and communities in the UK and around the world.
“The group remains absolutely focused on supporting its customers and helping Britain recover from the financial effects of the pandemic.
"The long-run transformation of the group has positioned the business well to address the challenges of the pandemic.”
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