Underlying profit in 2016 was slightly lower than the previous year, while statutory profit rose sharply as the bank had to set aside far less money to pay for PPI claims. Shares of the bank rose sharply after the figures.

(Updates with share price reaction, comment)

Lloyds Banking Group, the UK bank, reported underlying profit for 2016 of £7.867 billion ($9.821 billion), 3 per cent lower than 2015, with slightly lower income and higher impairments, partly offset by lower costs.

Statutory profit before tax more than doubled to £4.238 billion, compared with £1.644 billion in 2015, because the bank had to set aside far less money to compensate customers for past mis-selling for payment protection insurance.

Analysts said the statutory profit result, and other numbers, were ahead of expectations and shares rose by around 4 per cent from the open. “This was an absolute stellar set of earnings, almost the mirror opposite of the HSBC figures yesterday. Lloyds’ full year pre-tax profit came in at £4.2 billion, versus £1.46 billion from the previous year. This was partly down to the bank incurring lower PPI provisions and one-off write-offs, while enjoying arguably their strongest full year performance since the 2008 credit crisis," ordan Hiscott, Chief Trader at ayondo markets, said.
 
“On the back of these fantastic results, not only will the annual dividend be increased, but a special dividend of 0.5p per share will also be paid. In my opinion, these results and special dividend confirm that Lloyds has truly turned a corner. As you would imagine shares are higher today, up 4% to 69.63p, the highest they’ve been since the vote to leave the EU," added Hiscott.

“Looking ahead, investors should appreciate that Lloyds expresses confidence in its capabilities and the expectation that the simplification and transformation of its business should see it deliver superior returns for shareholders. Nevertheless, whilst our confidence in the group continues to grow, we continue to recommend Lloyds as a ‘hold’ for medium risk investors seeking growth," Helal Miah, investment research analyst, Share Centre, said in a note today. 

“Today Lloyds reported Q4 profits despite being faced with restructuring costs, beating the consensus of analyst expectations. Indeed, investors should appreciate that Britain’s biggest mortgage lender stated that pre-tax profits for the period rose to £973 million, which was up from a £507 million loss in the same period last year. The profit will undoubtedly be a boost to the British government, given that it hopes to restore Lloyds to full private ownership in the next few months after the bank was bailed out by the tax payer in the 2008 financial crisis," Miah said.

The banking group did not specify results for wealth management or private banking.

The lender said its balance sheet remains strong and the common equity tier one ratio at 31 December 2016 was 13.8 per cent on a pro forma basis.

The board recommeded a final ordinary dividend of 1.7 pence per share, making a total ordinary dividend of 2.55 pence per share, an increase of 13 per cent on 2015 and in line with its dividend policy. In addition, the board has recommended a special dividend of 0.5 pence per share.