Lloyds hands investors £4bn as profits jump
LLOYDS is doling out £4bn to investors and is launching a massive expansion in the pensions market.
The bank will pay an annual dividend of 3.21p per share, or £2.3bn in total, to 2.5m small shareholders.
And it will buy back £1.8bn of stock to drive up the share price.
The announcement came as Lloyds revealed profits of £6bn for 2018, up 13pc on a year earlier.
The lender is on a crusade to conquer the pensions market, by luring 1m new customers by 2020.
Bosses insisted this ambitious target would not trigger a return to the misselling scandals, such as payment protection insurance (PPI), which blighted Lloyds in the past. ‘This is a completely different Lloyds,’ said finance director George Culmer.
Laith Khalaf, an analyst at Hargreaves Lansdown, said: ‘With such a high market share in key banking markets, the question is: where Lloyds goes next? Part of Lloyds’ new strategy is to shuffle sideways into the financial planning and retirement market. It makes sense to give Lloyds some diversification from core banking activities.’
Lloyds’ dividend payout will be a boon to its army of 2.4m small shareholders, many of whom have owned the stock since its takeovers of Halifax and Cheltenham & Gloucester Building Society. An average retail investor with 6,000 shares will get around £193.
The buyback should also boost Lloyds’ share price and will see the bank purchase stock on the market and cancel it.
This will mean there are fewer shares in circulation but the lender’s value is the same, so each share is worth more.
Profits were boosted by fewer compensation payouts to credit card customers wrongly sold toxic PPI. It set aside £750m for victims of the scandal last year, down from £1.7bn in 2017.
So far PPI has cost Lloyds £19.4bn, but the final deadline for complaints is in August.
The bank, which is Britain’s largest mortgage lender and owns credit card firm MBNA, is unable to grow much bigger in most markets because it already has a dominant position.
So bosses are focused on conquering the pension industry, hiring an extra 700 financial advisers, and hoping to nab 1m more customers. They have teamed up with wealth manager Schroders to help wealthy clients invest their money.
Lloyds and Schroders will launch a jointly-owned financial planning business called Schroders Personal Wealth. It is likely to spark concern from older customers that the lender will return to the high-pressure sales tactics. But Culmer insisted: ‘This is a completely different Lloyds – we don’t have incentives and sales targets right across our franchise.’
The lender axed 108 branches last year, and chief executive Antonio Horta- Osorio refused to rule out more closures. Shares rose 4.7pc, or 2.76p, to 61.13p.