LLOYDS £3.2bn GIVEAWAY
As fears grow of branch closures, 2.4m investors finally get a boost
More than 2.4m shareholders in Lloyds are to get a £3.2bn payout after Britain’s largest bank notched up its biggest profits in a decade.
The bank’s army of small investors will be handed the cash through a dividend and a £1bn share buyback. Lloyds raked in £5.3bn last year, up 24pc on 2016.
Chief executive Antonio Horta-osorio also saw his pay rise from £5.8m to £6.4m, putting him on course to be Britain’s best-paid bank boss this year.
It came as Lloyds unveiled a £3bn investment in its digital and high-end investment operations. The new focus on internet banking is likely to pose a fresh threat to branches, with one analyst predicting 350 could shut.
on top of this, it has pledged a push to pick up 1m more pension customers and boost its investment arm.
Horta-osorio has fought to save cash since taking charge in 2011, shutting a third of the lender’s outlets and axing 30,000 jobs.
It is handing out a total ordinary dividend of 3.05p per share, up 20pc on 2016, and another 1.4p per will be given to investors who take part in the buyback, for a total of 4.45p.
The £3.2bn bonanza is the highest since the financial crisis, and marks Lloyds’ return to private ownership after its state bailout in 2008. Millions of ordinary families own the stock, with an average of 6,000 shares, meaning they could get £267 each.
Lloyds was helped by the first rise in interest rates since the financial crisis, when the Bank of england lifted them to 0.5pc from an all-time low of 0.25pc.
retail banks make money by taking savers’ deposits and lending them to borrowers.
The rate paid to savers will be lower than what borrowers are charged, and the gap between the two is measured by the socalled net interest margin.
When this is higher, lenders make more cash because they keep a greater share of income instead of giving it to savers, and it typically rises when the Bank of england puts its base rate up.
Last year, Lloyds’ margin jumped from 2.71pc to 2.86pc – the highest since 2006, well before the crisis, when the base rate was far higher at as much as 5pc.
Bank of england governor Mark Carney has signalled that rates will continue to go up, meaning more profit for Lloyds.
But boss Antonio Horta-osorio denied putting the squeeze on savers and vowed to pass on rate rises. He said: ‘We will probably see prices going up for savers.’
Lloyds wrote off £795m of bad loans in 2017, up from £645m, largely due to its £1.9bn acquisition of credit card firm MBNA.
Total lending rose by £6bn to £456bn but the bank cut back on high-risk mortgages. The total size of its book where homeowners have a deposit of 20pc or less dropped by £1.7bn to £30.7bn.
Lloyds set aside £600m for customers sold useless payment protection insurance on their credit cards, taking its total annual bill to £1.7bn. The scandal has cost the bank £18.7bn in seven years.