Lloyds profits surge, announces shares buyback
Lloyds Banking Group joined other big banks by unveiling bumper profits and announcing a buyback of shares.
Pre-tax profits for the year to 31 December 2021 came in at £6.9bn, up from £1.2bn the year before, as an improved economic outlook in the UK led to a net underlying impairment credit of £1.2bn compared with a £4.2bn charge in 2020.
The figure was below the £7.2bn consensus forecast, largely down to huge charges for past misdeeds of £1.3bn, including an additional £600 million for payouts and costs related to historic fraud at its HBOS Reading branch.
Chief executive Charlie Nunn, announcing his first full-year results since taking the job, said: “2021 has been a year of solid financial performance with successful strategic execution, ongoing investment and continued franchise growth.”
The board has recommended a final ordinary dividend of 1.33p per share, resulting in a total ordinary dividend for 2021 of 2p per share.
It has also announced a share buyback programme of up to £2 billion, given the strong capital position of the group.
In early trade shares were hit by the plunge in global markets following Russia’s attack on Ukraine and fell 4.03p (7.71%) to 48.18p.
John Moore, senior investment manager at Brewin Dolphin, said: “Lloyds has delivered a strong set of results; albeit, they are slightly below expectations, with historic issues adding to costs.
“The bank’s results follow similarly strong numbers from NatWest, Barclays, and HSBC, pointing towards a banking sector in, broadly speaking, rude health.
“With an already comparatively healthy net interest margin and enough capital to buy back its own shares, Lloyds is doing well – but, historically its fate has largely been tied to the performance of the UK’s housing market, the prospects of which currently split opinion.
“Performance at its other divisions, along with further diversification, may prove key in sustaining Lloyds’ recovery.”