Lloyds Banking Group cheered a "robust" performance in the first three months of the year as it posted a 6% dip in underlying profits to £2.1 billion.
It said that, excluding the TSB business, which it sold last year, profits were "stable" on a year earlier.
The lender has escaped the hefty profits hit suffered by its investment banking rivals, with Barclays posting a 25% fall in first-quarter profits on Wednesday.
On a bottom-line basis, pre-tax profits dropped 46% to £654 million, but this includes a £790 million charge from buying back high-interest bonds - also called "enhanced capital notes" or ECNs - from investors.
Group chief executive Antonio Horta-Osorio said the results show the group's ability to "actively respond to the challenging operating environment".
Total loans and advances to customers were £457 billion at the end of March 2016, an increase of £2 billion since the final quarter of 2015.
Customer deposits were £1 billion higher since 2015 at £419 billion.
The group said it took no further charges for the payment protection insurance (PPI) mis-selling scandal.
It saw statutory pre-tax profits fall 7% to £1.64 billion in 2015 after taking a £2.1 billion PPI hit.
But the group said in its latest update that PPI claims had been "broadly" in line with its expectations so far in 2016, at around 8,500 a week.
Lloyds said the first quarter had been "incredibly strong" for mortgages after seeing a surge in demand from buy-to-let borrowers and those buying second homes ahead of the Government's stamp duty increase on April 1.
Mr Horta-Osorio joined rival Santander in cautioning over a drop-off in lending following the stamp duty hike.
But the group said it was only a "very small" factor behind its first-quarter performance and added that lending was set to level out over the year.
Santander warned on Wednesday that the mortgage industry faced "challenges" over the year ahead following the drop-off in demand since April 1 and ahead of the EU referendum.
Lloyds, which holds its annual general meeting for shareholders in mid-May, said cost- cutting helped it weather a tough first quarter for the banking sector as it continues to shed jobs and close branches.
Last week it axed a further 625 roles, with some jobs going offshore to India.
The latest cuts are part of 9,000 job losses announced by the bank in 2014.
Shares in Lloyds fell 2% after the first-quarter figures amid wider falls in the banking sector.
Banking expert Gary Greenwood, of Shore Capital, said: "Overall, these represent a solid if unexciting set of results, which is not necessarily a bad thing for a bank."
Taxpayers still own just under 9% of Lloyds and a Government plan to sell the remaining shares in February was postponed amid turmoil in the financial markets.
The Government will only sell the shares when the price rises above the 73.6p break-even level at which Lloyds was bailed out at the height of the financial crisis.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here