Lloyds chasing divi despite Co-op sale collapse

Lloyds are eyeing a dividend despite the collapse of the Co-Op deal. Picture: PA
Lloyds are eyeing a dividend despite the collapse of the Co-Op deal. Picture: PA
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A RETURN to dividends at Lloyds Banking Group could be on the cards after its chief executive said the state-backed bank’s improving health has increased the possibility of pay-outs.

The bank is set to publish first-quarter results tomorrow which are expected to show that underlying profits more than doubled compared to last year, to around £1.2 billion.

That is despite the recent collapse of plans to sell a 632 branches to the Co-op. The sale process has reportedly cost Lloyds £740 million so far, although the bank says the cost would have been the same had it proceeded straight to a flotation, as it now plans.

Antonio Horta-Osorio, chief executive, said the figures will also show that the group continued to grow its net lending to small and medium-sized enterprises (SMEs).

He said that resuming dividends is a key target for the bank, along with allowing the government to sell its 39 per cent stake acquired when Lloyds merged with Halifax Bank of Scotland. Lloyds has not paid a dividend since the ill-fated takeover in 2008.

Horta-Osorio told a Sunday newspaper: “As we finish our legacy issues, the profitability of the bank is going to increase a lot, and, given we don’t have a usage for those funds, it is obvious that Lloyds will be a high dividend-paying stock in the future, as it has been in the past.”

The bank is thought to be waiting for clarity on how much cash it must retain as capital before pulling the trigger on dividends.