13th February 2014
Lloyds has reported a pre-tax profit of £415m ($690m) for the first time since its £20.5bn bailout. Underlying profits surged to £6.17bn in the 12 months to December 2012, up 140% from the £2.57bn recorded in 2012. The 24% increase in core profits to £7.57bn outweighed non-core losses of £1.41bn, which were 60% lower than the previous year.
Last year the bank made a loss of £660m. Chief Executive António Horta-Osório said: “We have a strong business model and have made significant progress, despite our legacy issues, in improving our capital position and profitability in a sustainable way. As a result, the UK Government started the process of returning the group to full private ownership,” he said.
Horta-Osório was paid a bonus of £1.7m in shares for 2013 though it is deferred until 2019. The total bonus pool for employees in 2013 was £395m, compared with £365m in 2012. This is equal to 6% of pre-bonus underlying profits, down from 12% the previous year, due to the big jump in profits.
There was a 2% increase in total underlying income to £18.81bn, a 5% reduction in total costs to £9.64bn and a 47% fall in impairment charges to £3.0bn, principally reflecting the beginning of the end of compensation for the mis-selling of PPI.
Analyst Shore Capital expects a dividend of 1.5p to be paid in the second half of 2014, rising to 3.5p for 2015. The news has also prompted speculation that the government may sell more of its 33% stake.