Lloyds ‘normal’ after first profit for three years

Lloyds Banking Group could soon restore its dividend payments. Picture: Getty
Lloyds Banking Group could soon restore its dividend payments. Picture: Getty
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Lloyds Banking Group posted its first profit in three years today, as its chief executive clashed with an influential MP on whether it signified the taxpayer-bailed out bank had returned to “normal”.

Unveiling a pre-tax profit of £415 million for 2013 against a loss of £606m in 2012, Lloyds boss Antonio Horta-Osorio said the bank was ready to return to full private ownership when the government decided to sell its remaining 33 per cent stake.

“We absolutely consider ourselves back to normal. It’s absolutely up to UKFI [which manages the taxpayer stake] and the Treasury to decide how and when to dispose of those shares,” Horta-Osorio said.

But Andrew Tyrie MP, chairman of the House of Commons Treasury select committee, rejected the claim that the bank had returned to normal.

“This return to normality has taken longer than many expected,” Tyrie said.

“It will only be complete once Lloyds has been fully returned to private sector ownership and is clear of the legacy of past misconduct – misconduct that continued well after the financial crisis.”

Lloyds’s return to headline profit came despite a further £3.1 billion being set aside in 2013 for mis-selling payment protection insurance, taking its total bill for the scandal to nearly £10bn.

The bank, which also owns Bank of Scotland, Scottish Widows insurance company and Halifax, needed a £20bn state bailout in the financial crisis.

The government sold 6 per cent of its stake last September to institutional investors, raising £3.2bn.

Lloyds finance director George Culmer confirmed that the bank would apply to the regulator in the second half of 2014 to restart dividends, which is seen as boosting the prospect of further taxpayer stake sales.

Horta-Osorio said he expected to pay out at least half of a “simple, efficient and low-risk” Lloyds’s earnings in dividends over the medium term.

However, the bank risked sparking a fresh political row by awarding £395m in bonuses for last year, including a £1.7m award to Horta-Osorio. His bonus will be paid in shares and is deferred for five years.

Lloyds, which is registered in Edinburgh, professed itself relaxed about the upcoming vote on Scottish independence.

Horta-Osorio said he “absolutely respected” it was a matter for the Scottish people and the Scottish and UK parliaments.

He said the vote was “not only an economic matter”, adding: “If the vote is a ‘yes’, there will be 18 months until separation is implemented so therefore we believe we have more than enough time to assess the consequences or actions we would need to take.”

Lloyds said overall gross new mortgage advances rose £10.7bn to £37bn in 2013, while lending to small and medium sized businesses lifted 6 per cent in a market contracting 3 per cent.

The bank, which has 30 per cent of the UK mortgage market, is seen as benefiting from government initiatives to stimulate the housing sector, including the Help to Buy scheme.

Shares in Lloyds fell 2.21p or 2.65 per cent to 81.32p.

Analysts said this was because the better trading performance suggested an earlier sell-down of the government’s remaining stake, which would overhang the share price.