Bank of Scotland owner Lloyds restores dividend as profits slide amid pandemic

Bank of Scotland owner Lloyds Banking Group has seen profits slide by 72 per cent as it battles with the economic fallout from the pandemic.

Lloyds Banking Group is the owner of Bank of Scotland. Picture: Ian Rutherford

The banking giant revealed the extent of the financial devastation caused by Covid-19, as statutory pre-tax profit foer 2020 fell to £1.2 billion, from £4.4bn the previous year.

The figure is ahead of the £905 million analysts had expected, according to a company-compiled consensus, and the bank said it will restart dividend payouts.

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It came as Lloyds, which also owns Scottish Widows, booked impairment charges – money it sets aside for loans that could sour – of £4.2bn, compared with £1.3bn a year earlier.

That was lower than the £4.7bn that analysts were expecting, after the group notched up impairments of just £128m in the fourth quarter, compared with the £586m that had been expected.

Net income dropped 16 per cent to £14.4bn across the financial year.

Outgoing chief executive Antonio Horta-Osorio said: “Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world.

“I remain confident that the group’s clear purpose, unique business model, significant competitive advantages and the customer-focused evolution of our strategy we have announced will ensure that the group is able to help Britain recover and, in so doing, help transition to a sustainable economy.”

It is the last set of full-year results for Horta-Osorio, before he is replaced by Charlie Nunn, the head of HSBC’s high street banking unit.

The boss, who has led Lloyds for a decade, will become chief executive of Credit Suisse later this year. Nunn will take up the post in August, Lloyds confirmed alongside its full-year results.

The board announced that it will be bringing back dividends, which were suspended at the beginning of the Covid-19 crisis, setting an ordinary payout of 0.57p per share, the maximum allowed under Prudential Regulation Authority guidelines.

Michael Hewson, chief market analyst at CMC Markets UK, said: “With Lloyds Banking Group’s share price currently trading at its highest levels this year, [these] full-year numbers are set to be a fitting final legacy of outgoing CEO Antonio Horta-Osorio’s tenure in his ten years as head of the bank.

“When he took over in January 2011, three years after the bank received a £20.5bn bailout from the UK government the bank was in a parlous state, despite a share price that was higher back then, than it is now.

“Over the last ten years the bank has returned to profitability, as well as private ownership and while it hasn’t been an easy ride, by 2017 the bank managed to post a statutory profit of £5.3bn, as well as paying out the largest dividend ever to its shareholders of £2.3bn.

“The last 12 months have been a big test for the bank, let alone the UK economy, however at no time were there any questions as to whether the bank would be able to deal with the challenges posed by the coronavirus pandemic.”

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