UK's Lloyds Resumes Dividend Payments; Profits Surged In 2014

Tom Burroughes

27 February 2015

London-listed , in which the UK government retains a stake, today announced a surge in statutory pre-tax profit to £1.762 billion ($2.71 billion) for 2014 from £415 million a year earlier. It also resumed dividend payments for the first time since it was bailed out amid the financial crisis.

WealthBriefing was unable to see any specific reference to performance of Lloyds’s private bank; it may update in due course and is in contact with the bank seeking details. Just over a year ago, Lloyds Banking Group sold its stake in St James’s Place, the wealth management house; it also spun off international private banking operations such as to Switzerland’s Union Bancaire Privée in 2013.

Late on Friday afternoon, shares in the bank were up around 1.2 per cent at 79.45 pence.

The resumption of dividend payments (see below) has been taken as a sign that the bank, while still recovering from the traumas of 2008, has turned a big corner, and arguably is in better financial shape than , which is majority-owned by the government. The bank’s core Tier 1 capital ratio is 12.8 per cent. UK finance minister George Osborne hailed the results, describing them as a “milestone”.

The statutory pre-tax profit was after provisions for payment protection insurance mis-selling claims of £2.200 billion (2013: £3.050 billion) and other regulatory matters of £925 million (2013: £405 million), liability management losses of £1.386 billion (2013: £142 million), Simplification and TSB build and dual running costs of £1.524 billion (2013: £1.517 billion) and a pension credit of £710 million (2013: charge £104 million).

The statutory profit after tax in 2014 was £1.499 billion compared to a loss after tax of £802 million in 2013.

The bank recommended paying a dividend of 0.75 pence per ordinary share in respect of 2014, amounting to £535 million. “The group's aim is to have a progressive dividend policy, with dividends starting at a modest level and increasing over the medium term to a dividend payout ratio of at least 50 per cent of sustainable earnings. Subject to performance, the intention is to pay an interim and final dividend for 2015,” the bank said.