Lloyds reaches profit landmark

LLOYDS Banking Group scored its highest profit since its takeover of HBOS in 2009, in a “landmark” year when it returned to private ownership.

The UK’s biggest mortgage lender raised its dividend payout by 20 per cent and announced a share buyback of up to £1billion – a total return to shareholders of £3.2billion – after its pre-tax profit jumped by 24 per cent to £5.3billion.

It will also invest more than £3billion over the next three years “to transform the group for success in a digital world”.

Shares rose 2p to 69¾p as projections for further cost savings and higher dividends outweighed disappointment at higher than expected costs for past misconduct.

Lloyds increased provisions for payment protection insurance mis-selling by £1.65billion in 2017, of which £600million came in the fourth quarter, to take its total to £18.7billion. Complaints have increased since the launch of the Financial Conduct Authority’s advertising campaign for the August 2019 industry deadline.

CEO Antonio Horta-Osorio, pictured, whose pay including bonuses was up by 11 per cent to £6.4million, said: “2017 has been a landmark year in which the group has made significant strategic progress and returned to full private ownership. We have now built the largest and toprated digital bank in the UK. We are therefore well prepared to succeed in a digital world.”

Its digital investment drive responds to new rules forcing big banks to open up customer data to rival lenders and financial technology firms, to increase competition for customers.

Lloyds said it remains committed to maintaining the country’s largest branch network, but did not disclose the impact on jobs. It is also looking to expand in the financial planning and retirement market, targeting one million new pension customers by 2020.

Neil Wilson, senior market analyst at ETX Capital, said: “Lloyds is increasingly looking like a bank firing on nearly all cylinders. Capital generation is evidence Lloyds is a considerably more profitable business than it was a couple of years ago.”

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “There’s a lot to like in Lloyds’ numbers.

“Bad loans remain at low levels, as you would expect given the benign economic environment. Here lies the risk with Lloyds, as a shock to the domestic economy would be keenly felt by the bank.”