London: Lloyds Banking Group, Britain’s largest mortgage lender, swung to a fourth-quarter profit even as it faced more than 700 million pounds of conduct and restructuring charges.
Pretax profit was 973 million pounds, compared to a loss of 507 million pounds a year earlier, the London-based bank said in a statement on Wednesday, falling short of analysts’ estimates for 1.38 billion pounds. Excluding one-time charges, profit rose 2 per cent to 1.79 billion pounds, topping the 1.71 billion-pound average of seven analyst estimates compiled by Bloomberg News.
Chief Executive Officer Antonio Horta-Osorio, 53, is looking to protect Britain’s largest consumer bank from the pressure of record-low interest rates by eliminating jobs and expanding in higher-margin lending with the acquisition of Bank of America’s MBNA UK credit card business. Lloyds is finally incurring fewer charges for PPI after taking more than 17 billion pounds in provisions since 2011.
"We have delivered strong financial performance in 2016 as we continue to make good progress against our strategic priorities,” Horta-Osorio said in the statement. "Strong capital generation, which is a consequence of our business model, has enabled us to fully cover the expected capital impact of the MBNA acquisition, increase our ordinary dividend by 13 per cent and pay a special dividend.”
Lloyds said it would pay an ordinary dividend of 2.55 pence per share and a special dividend of 0.5 pence per share, up from total payouts of 2.75 pence a year earlier. The firm’s core Tier 1 capital ratio, a measure of financial strength, rose to 13.8 per cent from 13.4 per cent at the end of September.
Although Lloyds has gained about 8 per cent this year in London trading, it’s still valued less than it was before Britain voted to leave the European Union in June. BlackRock replaced the UK government as the largest shareholder last month as the state continues to gradually shed its stake.