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Rise in profits at bank

Lower PPI helps edge Lloyds back to normality

Antonion Horta-Osorio YoutubeLloyds 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.

António Horta-Osório1

George Culmer

Juan Colombás

Totals

£000

2016 

2015 

2016 

2015 

2016 

2015 

2016 

2015 

Base salary

1,125 

1,061 

745 

731 

739 

724 

2,609 

2,516 

Fixed share award

900 

900 

504 

504 

497 

497 

1,901 

1,901 

Benefits

143 

140 

42 

41 

70 

73 

255 

254 

Other remuneration2

1 

Annual bonus

1,220 

850 

574 

462 

578 

455 

2,372

1,767 

Long-term incentive3

1,584 

5,183 

857 

2,804 

763 

2,496 

3,204 

10,483 

Pension allowance4

568 

568 

186 

182 

185 

181 

939 

931 

Total remuneration

5,541 

8,704 

2,909 

4.726 

2,833

4,428 

11,283

17,858 

Less: performance adjustment5

– 

(234)

– 

(65)

(3)

(302)

Total remuneration less performance adjustment

5,541 

8,470 

2,909 

4,661 

2,833

4,425 

11,283

17,556 

 

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