Lloyds Banking Group reported a decline in underlying profit in the first three months of the year, but said the performance over the period was "robust" and reiterated its full-year guidance.

In the three months to 31 March, the FTSE 100 lender posted a 6% year-on-year decline in underlying profit to £2.05bn ($2.99bn, €2.63bn), although the group said the figure was in line with expectations once its TSB business was stripped out.

However, statutory profit before tax plunged 46% from the corresponding period in 2015 to £654m following the purchase of more than £3bn of expensive bonds from investors in the first quarter.

A 1% reduction in income was offset by lower operating costs and reduced impairment charges, which fell 2% and 6% respectively.

Net interest income, a measure of earnings from loans minus deposit costs, increased by 3% to £2.9bn, while net interest margin, another key measure of profitability, was 2.74% compared with 2.64% in the previous three months.

"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," said group chief executive António Horta-Osório.

"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."

Total loans and advances to customers amounted to £457bn at the end of the first quarter, a £2bn increase from the previous quarter, with increased lending to small and medium businesses and other commercial clients, while customer deposits were £1bn higher than in the previous three months to £419bn.

The FTSE 100 bank, which earlier this month unveiled plans to cut approximately 600 jobs across a number of divisions and offshore its IT operations to India, said the second stage of its cost-reduction programme has delivered £495m of annual run-rate savings, ahead of plan and on track to deliver £1bn savings by the end of 2017.