Lloyds’ loyal band of investors pocket £2bn dividend boost

LLOYDS Bank announced a surprise £2bn dividend that will reward its loyal band of 2.7m small shareholders with an average payout of £160.

Britain’s biggest bank yesterday revealed a full-year dividend of 2.25p per share, along with a special dividend worth 0.5p per share.

This was despite a profits fall at the group, as they dropped 7 per cent to £1.6bn in 2015. This was largely due to the bank being forced to set aside a further £4bn to pay victims of the PPI misselling scandal.

Ignoring this and other one-off costs, underlying profits were up 5pc to £8.1bn.

Shares rose 8.44p to 70.64p although this is still below the crucial 73.61p threshold at which the Government is expected to sell its remaining stake in the bailed-out bank.

The Chancellor earlier this year suspended a sale planned for the spring and bank bosses would not be drawn on when they might now act.

Lloyds chief executive António Horta-Osório said: ‘It’s up to the Government to decide when to sell the shares.

‘We will support them whatever choice they make.’

Hargreaves Lansdown analyst Laith Khalaf said turmoil in the markets and uncertainty over the EU referendum in June made a final share sell-off unlikely any time soon. He said: ‘ There’s probably going to be some volatility because of the vote.

‘The last thing the Government wants to do is come out and say it’s all back on again and then have to run to the hills.

‘It could happen this year but I wouldn’t bet the house on it.’

The dividend payout, which will be made on May 17, will see the average investor with 6,000 shares pocket about £160.

Lloyds said it wanted to pass its recent success on to shareholders. It aims to pay a dividend worth more than 50 per cent of ‘sustainable’ profits in coming years, meaning payouts will probably continue to rise. The bank’s chairman Lord Blackwell said: ‘Our policy has been very clear – we want to have a sustainable and progressive dividend.’

The shareholder payout marks a return to form for Lloyds, which was traditionally regarded as one of the City’s most reliable sources of dividends until it was forced to suspend them in the 2008 crisis.

Investors started earning again in 2014 but only got 0.75p per share. This year’s more significant payment makes Lloyds the ninth-biggest dividend-paying stock for 2015.

Next year, city experts expect the bank to pay a dividend of about 3.8p per share. Lloyds’ total bill for the PPI scandal now stands at £16bn but bosses hope the latest payments will bring the saga to an end. The City watchdog has proposed a timelimit on claims, giving consumers until spring 2018 to act.

That was strongly backed by Horta-Osório yesterday.

He said: ‘Everybody knows about PPI but some people only act upon deadlines.

‘That’s why we very strongly believe a deadline will bring claimants forward and then we will be able to move on and close this very sad chapter.’