Lloyds Reports Jump in Profit, Pumps Up Dividend -- Update
February 22 2017 - 04:26AM
Dow Jones News
By Max Colchester
LONDON-- Lloyds Banking Group PLC said its annual net profit
more than quadrupled to its highest level in a decade as the bank
benefited from a steep fall in conduct costs.
Lloyds, which is two years into a three-year turnaround plan,
said it would target higher margins as it continues to benefit from
its dominant position in the U.K. retail-banking market.
Lloyds said revenue in 2016 was GBP17.3 billion ($21.6 billion),
compared with GBP17.4 billion a year earlier, hit by lower interest
rates. Net profit came in at GBP2 billion.
One major boost for Lloyds's bottom line: The bank was spared
having to put more money aside in the final quarter of the year to
compensate customers who bought insurance products they didn't
need. The bank did, however, have to put aside GBP475 million cover
off a range of conduct issues, including the sale of packaged
accounts to customers.
Shares were up 4% in morning trading.
Chief Executive António Horta-Osório said the British economy
has continued to hold up well after the Brexit vote. "We have not
seen any change," he said.
Over the past year, the U.K. government has cut its Lloyds stake
to below 5%, marking another step toward normalization for the
retail bank following its bailout in 2009. This was reinforced in
December when Lloyds announced it was buying Bank of America
Corp.'s U.K. credit-card business MBNA Ltd. for GBP1.9 billion, its
first major acquisition since the bailout. Mr. Horta-Osório said
the bank wasn't planning any more major deals but would look at
loan portfolios if they came up for sale.
Lloyds said it would pay a total ordinary dividend of 2.55 pence
a share, up 13% on the year before. The bank also presented a
special dividend of 0.5 pence a share.
The bank said it was leaning toward creating a hub in Berlin for
its European operations post-Brexit. As a mostly U.K.-centric bank,
it would have to move very little activity, and would simply
convert its existing Berlin branch into a subsidiary and no staff
would be transferred.
Despite the strong profit, Mr. Horta-Osório's bonus was cut by
just over GBP3 million, to GBP5.5 million, in part because the
bank's shares fell steeply last year after the June Brexit vote.
Mr. Horta-Osório played down ideas that he might call time on his
six-year tenure at the bank. "The job is never done," he said.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
February 22, 2017 04:11 ET (09:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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