Lloyds Banking Group confirmed its return to health with a 158% rise in headline profit to £4.2 billion and a special dividend for shareholders.

Lower PPI payments helped boost the annual figures. Lloyds has paid out £17bn linked to the PPI scandal and in today’s provision has fallen from £4bn to £1bn.

The bank’s shares led the FTSE 100 higher, up around 4% in early trade, in response to what was regarded as it best performance for a decade and which will help the government sell its remaining shares.

Chief executive Antonio Horta Osorio (pictured) said the bank had made “good progress” against its targets. Underlying profit was slightly down at £7.86bn (2015: £8.11bn).

On the 2009 bail-out, the company notes that the UK government has reduced its stake to less than 5%, at a profit, returning more than £18.5bn to the UK taxpayer.

The bank’s profits have more than covered the cost of the MBNA credit card company acquisition – its first since the government rescue – and has raised the ordinary dividend by 13%.

Mr Horta-Osorio, who will receive a £5.5 million pay and bonus package for reviving the bank, added: “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.

“As a simple, low risk, UK focused bank we are committed and well positioned to help Britain prosper and become the best bank for customers and shareholders.”

On the Brexit issue, the bank said in a statement: “Given our UK focus, our performance is inextricably linked to the health of the UK economy which has been more resilient than the market expected post referendum, with GDP growth of 2% in 2016.

“The UK’s decision to leave the European Union means the exact nature of our relationship with Europe going forward remains unclear and the economic outlook is uncertain. However, the recovery in recent years with low unemployment, reduced levels of household and corporate indebtedness and increased house prices means the UK is well positioned.

The total bonus has increased from £353.7 million to £392.9mi but remuneration for the top executives has been cut from £17.5m to £11.2m.

2016 Executive Director Remuneration Outcome Table

The following table summarises the total remuneration delivered during 2016 in relation to service as an Executive Director.

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