Lloyds profits jump despite increased PPI bill

 
Oliver Gill
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Lloyds Bank profits rose despite an increase in PPI costs (Source: Getty)

Lloyds Bank annual profits leapt by almost a quarter despite a jump in PPI payouts.

The figures

Net interest income rose eight per cent to £12.3bn while operating costs were one per cent higher at £8.2bn.

Lloyds' provision for PPI rose from £1bn to £1.7bn.

Profit before tax was £5.3bn, up 24 per cent.

Dividends were hiked by 20 per cent to 3.05p per share – this puts them on a par with last year's shareholder returns which were a combination of ordinary and special payouts.

Lloyds also kicked off a £1bn buyback programme.

Read more: Noel Edmonds complains to advertising watchdog about Lloyds Bank adverts

Why it's interesting

With a PPI deadline approaching the number of PPI complaints Lloyds is receiving has spiked from 9,000 to 11,000 a week.

So it is hardly surprising that there was a big jump in Lloyds' cost of redress.

Despite this, Lloyds bottom line was on the up. Underlying profits were higher and lower volatility helped the banking giant delivered chunky returns in 2017. Investors will be buoyed by the fact a special dividend paid last year has effectively been repeated – but this time locked into ordinary payouts.

Meanwhile, the share buyback programme will allow shareholders to realise a further 1.4p per share of returns.

Read more: Lloyds to reveal £1bn share buyback and boost bonus payouts to £415m

What the company said

"2017 has been a landmark year for the group," said Lloyds chief executive Antonio Horta-Osorio.

"In May the UK government completed the sell-down of its shares and the group returned to full private ownership. This was enabled by the significant strategic progress and strong financial performance in recent years and was down to the hard work of all our people and I thank them for it.

"During the year we successfully completed the second phase of our strategy with significant improvement in customer service, development of our market leading digital proposition including an open banking platform, targeted growth and delivery of simplification savings ahead of target.

2017 has also been a pivotal year for the UK. The Bank of England increased the bank rate for the first time in more than 10 years and the government triggered Article 50 and launched EU exit negotiations.

"Although the precise nature of the UK's future relationship with Europe remains unclear and the economic outlook is therefore uncertain, the economy has been resilient with low unemployment, stable house prices, record employment and GDP growth of 1.8 per cent," Horta-Osorio added.

Read more: Lloyds has set a target for ethnic diversity in its workforce

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