Lloyds Banking Group has reported a statutory profit before tax of £654m for the first quarter of 2016, a fall of 46.1% compared to £1.21bn a year earlier.

The bank attributed the drop in profit primarily to the £790m impact of redeeming high interest paying investor bonds, dubbed enhanced capital notes, as well as restructuring costs of £161m.

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For the quarter ended 31 March 2016, the bank’s underlying profit dropped 5.7% to £2.05bn from £2.18bn in the year-ago quarter.

Net interest income increased 2.7% year-on-year to £2.90bn from £2.83bn, while total income fell 0.8% to £4.38bn from £4.42bn in the prior year.

The group’s leverage ratio at the end of the first quarter was 4.7%, the bank said in its interim management statement.

Lloyds Banking Group CEO António Horta-Osório said: "In the first three months of this year we have continued to make good progress, delivering a robust financial performance and maintaining our strong balance sheet. These results demonstrate the strength of our differentiated, simple, low risk business model and reflect our ability to actively respond to the challenging operating environment.

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"We continue to support and benefit from a resilient UK economy and remain focused on delivering on our targets to people, businesses and communities as set out in our updated Helping Britain Prosper Plan. We have also recently launched our SME charter to help small businesses grow and to provide access to funding. In addition, we continue to make good progress in our strategic initiatives: creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth."