Lloyds profits raise divi hope
LLOYDS Banking Group rode the UK economy’s resilient post-referendum performance to double its first-quarter pre-tax profit to £1.3billion.
Britain’s biggest mortgage lender’s improving capital strength has also raised hopes for special dividend payouts for shareholders.
Lloyds is close to full privatisation after a reduction to below 2 per cent of the Government’s stake – it was 43 per cent when the lender was bailed out during the financial crisis in 2008, but the taxpayer’s £20.3billion has been recouped.
Shares rose 1½p to 69p as underlying profit, up 1 per cent to £2.1billion, and its net interest margin – a closely watched measure of profitability – beat analysts’ forecasts.
Chief executive Antonio Horta-Osorio, pictured, said: “These results continue to demonstrate the strength of our customerfocused, simple and low-risk business model and our ability to respond to a challenging operating environment.”
The results included a previously announced £350million provision for payment protection insurance misselling, with a further £200million set aside for other conduct issues – including £100million for victims of a fraud at a Reading branch of HBOS, for which six people were jailed in February.
Neil Wilson, senior market analyst at ETX Capital, hailed Lloyds as the “star of UK banking”. He added: “As misconduct charges continue to roll off, there is a good chance this momentum is sustainable. It looks like it can manage to further increase dividends.” Steve Clayton, of investment firm Hargreaves Lansdown, said: “Lloyds ability to generate capital, and its limited needs to retain much of that within the bank, mean that it has great dividend potential. It has raised its guidance for capital generation, which bodes well for the prospects for additional special dividends.”
TSB, the bank spun out of Lloyds before being bought by Spain’s Sabadell, said it had “hit the ground running” in 2017 in its bid to challenge the UK’s dominant high street players.
Although quarterly profit fell 39.5 per cent to £31.8million owing to an increase in fees paid to Lloyds after the split, consumer lending grew 12.6 per cent to £30.9billion. More than 6,000 customers a week opened a TSB account as deposits grew 11 per cent to £29.7billion.