Lloyds profits more than double to £4.2bn

Lloyds Banking Group today posted an annual pre-tax profit of £4.2 billion, more than double the £1.6bn figure reported for 2015.

Lloyds said its earnings were helped by lower PPI provisions. Picture: Jane Barlow

The Bank of Scotland owner, which is now less than 5 per cent owned by the taxpayer, said the dramatic increase in its earnings came as the amount of money set aside to compensate customers who were mis-sold payment protection insurance “reduced significantly”.

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Lloyds, which also owns the Halifax bank brand, said shareholders were in line for a final dividend of 1.7p a share, giving a total payout for 2016 of 2.55p – an increase of 13 per cent on the previous year. It also announced a special dividend of 0.5p.

Chief executive Antonio Horta-Osorio said: “We continue to improve our customers’ experience, simplifying the business whilst growing in targeted areas and in December announced the acquisition of MBNA’s prime UK credit card business.

“Strong capital generation, which is a consequence of our business model, has enabled us to fully cover the expected capital impact of the MBNA acquisition, increase our ordinary dividend by 13 per cent and pay a special dividend.”

A remuneration report also released by Lloyds today showed that Horta-Osorio’s total pay package shrank in value to £5.5 million last year, down from £8.7m in 2015. The reduction was due to a cut in his long-term shares award following the Brexit vote, which hit the company’s stock.

But his base salary will increase by 8 per cent to £1.2m this year – the first raise since he joined the lender in 2011. The group has also increased its total bonus pool to £392.9m, from £353.7m a year ago.

Chairman Lord Blackwell said: “Our approach to reward aims to provide a clear link between remuneration and delivery of the group’s key strategic objectives, namely, becoming the best bank for customers whilst delivering long-term, superior and sustainable returns to shareholders.

“The awards announced today recognise our further progress against our strategic objectives. The progressive return of the group to private ownership, the resumption of dividends since 2014 and our strong capital and balance sheet position are testament to the hard work of all colleagues to transform and simplify our business.”