LLOYDS should make a profit this year, its first since the bank collapsed and was bailed out at the height of the financial crisis, the group’s chief told shareholders in Edinburgh yesterday.
The claim sent shares soaring up within touching distance of the level at which the government would break even on a sale of its 39 per cent stake in the lender.
That will increase the chance of the lender being fully privatised in the near future – the government is known to hope the process will be well underway by the end of next year.
“We expect us to return to profitability this year and to grow our core business, to realise our full potential to deliver strong, stable and sustainable returns for you, the shareholders, and to allow UK taxpayers’ investment in the group to be repaid,” chief executive Antonio Horta-Osorio told investors at the annual general meeting.
As the bank’s capital levels and profitability improve it will seek permission from regulators to re-start paying dividends to shareholders, potentially next year.
That is seen as a key step on the road to privatisation as it shows the bank is healthy enough to give profits back to the owners instead of retaining them to strengthen its capital position.
The government put £20.5bn into the lender and should get its money back if it sells its shares for more than 61p each.
Yesterday the price jumped 2.59 per cent to 60.91p, its highest level in more than two years and more than double the price last May.
Meanwhile shareholders approved the bank’s accounts and compensation packages, as well as voting in favour of allowing the bank to issue regulatory capital convertible instruments in the next year.