Lloyds shares were down 1.19% in the first hour of trading, changing hands at 66.60 pence a share, on fears that it is too domestically focused.
Britain's largest mortgage lender reported an 8% increase in total income of £4.62 billion ($6.06 billion) in the three months ending in September, beating expectations of a 4.4% increase to £4.46 billion compiled by Factset.
The lender saw statutory profit more than double in the third quarter to £1.951 billion, up from £811 million in the same time period last year. Underlying profit in the quarter was up 9% to £2.075 billion.
The bank booked no extra PPI provisions in the third quarter, but booked a £270 million impairment charge without any details.
The bank's net interest margin - the difference between the interest it receives from lending and the amount it pays out, relative to assets - improved on lower costs to 2.9%in the third quarter, up from 2.7% in the same period last year.
The strong third quarter prompted the lender to lift its full year guidance. Lloyds expects capital generation to be between 225-240 basis points for 2017. The group now expects the net interest margin to be stable in the fourth quarter at around 2.90% and for the full year net interest margin to be around 2.85%.
"In the first nine months of the year we have delivered strong financial performance with increased underlying and statutory profit, a significant improvement in returns and strong capital generation. These results highlight the strength of our customer focused, simple and low risk business model and the benefits of our competitive advantage in the UK. Asset quality remains strong, reflecting our prudent approach to risk, while the UK economy remains resilient," CEO António Horta-Osório said in a statement.
The bank said it would outline a new organizational structure in February following a strategic review.
"The share price is still being held back by a consensus of angst over Brexit. The bank is heavily plugged into the domestic economy, and so could sustain collateral damage if Brexit negotiations prompt a slump in UK growth," Hargreaves Lansdown Senior Analyst Laith Khalaf said in a Wednesday note. "This risk is affecting sentiment towards many domestic cyclical stocks, and while it is a legitimate concern, there is considerable upside if things turn out for the better."
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