The Courier & Advertiser (Fife Edition)
Lloyds posts £5.3bn profit in landmark year for bank
STRATEGY: Banking group planning a £3bn investment after successful 2017
Lloyds Banking Group has hailed a “landmark year” as it posted a 24% surge in profits and unveiled plans to invest more than £3 billion as part of a new three-year strategy.
The group reported bottom line pre-tax profits of £5.3bn for 2017, up from £4.2bn in 2016. On an underlying basis, profits rose by 8% to £8.5bn.
The profit hike comes despite a mammoth £1.7bn hit from the payment protection insurance mis-selling scandal last year, after Lloyds revealed an extra £600 million put by for compensation in the fourth quarter.
Boss Antonio Horta-Osorio also unveiled a new three-year strategic plan which will see the bank invest more than £3bn and focus on boosting its digital capabilities.
This will include its “biggest ever investment in people” as it looks to increase staff training and development by 50% to 4.4 million hours a year to embrace new technology.
The update follows the bank’s return to private ownership last summer, nearly nine years after being bailed out at the height of the financial crisis.
Mr Horta-Osorio said: “2017 has been a landmark year in which the group has made significant strategic progress and returned to full private ownership.
“We have delivered another year of strong financial performance with improved profit and returns on both a statutory and underlying basis and have now built the largest and top-rated digital bank in the UK.”
Pay details released alongside the results also showed that Mr HortaOsorio saw his base salary rise to £1.2m from £1.1m, alongside additional increases to his long-term incentive plan and benefits.
It brings his total remuneration package to £6.42m, up from £5.79m.
The bank said it would increase the staff bonus pool by around 5.5% to £414.7m for 2017 after the bumper profit haul.
It is sticking to its £2,000 cash bonus limit, with the remainder paid in shares and deferred stock.
Mr Horta-Osorio also praised the resilience of the UK economy and said its plans were based on interest rates rising to 1.25% by the end of 2020.
There is speculation the Bank of England may move to increase rates again as soon as May.
Mr Horta-Osorio said: “Although the precise nature of the UK’s future relationship with Europe remains unclear and the economic outlook is therefore uncertain, the economy has been resilient, with low unemployment, stable house prices, record employment and GDP growth of 1.8%.”