LLOYDS Banking Group has doubled first quarter profits in a success that underlines how much faster it has recovered from the financial crisis than Royal Bank of Scotland.

Lloyds made £1.3 billion pre tax profit in the three months to March from a portfolio that includes Bank of Scotland and Scottish Widows, compared with £0.65bn in the same period last year.

Chief executive Antonio Horta-Osorio said the bank had reaped the rewards for operating a plain vanilla banking business focused on the UK.

While he described the operating environment as challenging, Mr Horta-Osorio observed: “The UK economy continues to benefit from low unemployment and reduced levels of indebtedness, and asset quality remains strong.”

Lloyds noted it provided £100 million in the first quarter to compensate victims of a £245m fraud at the former Halifax Bank of Scotland impaired assets operation in Reading.

Mr Horta-Osorio said: “We are determined that the victims of HBOS Reading are fairly, swiftly and appropriately compensated.”

However, the first quarter results provide further evidence the group has overcome the problems that it faced after requiring a £20.3 billion taxpayer bail out in 2008 following the takeover of HBOS.

In February, Lloyds posted its highest annual profit in a decade.

The UK Government finished recouping the cost of the bailout last week. Its holding has been sold down from 43 per cent to less than 2 per cent.

By contrast Chancellor Philip Hammond admitted recently the Government is prepared to sell the 72 per stake it holds following the £45bn bailout of RBS in 2008 at a loss to the public purse.

Royal Bank is expected to report an increase in underlying first quarter profits today.

But it is facing a £750m plus bill for a plan to satisfy the concerns EU regulators expressed about the bailout, which would provide an alternative to selling off 300 Williams & Glyn branches.

RBS suffered its ninth consecutive annual loss last year.

While it has made progress on many fronts, Lloyds continues to grapple with the problems resulting from the misselling of payment protection insurance. As announced in March the group took a £350m charge in respect of PPI in the first quarter, taking its total bill for the saga to £17.3 billion.

The increase in pre-tax profits partly reflects the fact Lloyds incurred a £790m charge to buy back expensive bonds from investors in the first quarter of 2016.

On an underlying basis, profits rose one per cent to £2.08bn. Some analysts expected profits to fall, given signs the economy may be slowing.

Mr Horta-Osorio said Lloyds continues to make good progress against its strategic priorities which include becoming simpler and more efficient and delivering sustainable growth, from activities such as lending to consumers and businesses.

The group provoked anger last month when it announced plans to close a further 100 branches, with more than 200 job losses, under its drive to cut costs.

Twenty four Bank of Scotland branches are expected to close between July and October.

Mr Horta-Osorio brushed aside fears of rising consumer debt, insisting underlying household borrowing was still less than it was before the financial crisis, with most of the recent growth coming from student loans and car finance.

Richard Hunter, head of research at Wilson King Investment Management, noted: "For the time being, the resilience of the UK economy is a boon for Lloyds, even though any retrenchment could threaten the situation."

Neil Wilson, senior market analyst at ETX Capital, hailed Lloyds as the "star of the banking sector".

"But we must factor some downside risks, particularly around credit risks - its increased exposure to the UK credit card market through the acquisition of MBNA is a risk for sure," he added.