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Lloyds to restart dividends as it returns to profit in 2013

Hannah Smith
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Hannah Smith

Taxpayer-backed Lloyds Banking Group posted a pre-tax profit in 2013 for the first time since its government bailout and plans to restart dividend payments in the second half of the year.

Posting its final results for 2013, the bank reported a statutory pre-tax profit of £415m compared to a loss of £606m for 2012.

Underlying group profit rose 140% to £6.2bn. However, with taxes included, Lloyds made a loss for the year of £802m, down from £1.4bn in 2012.

The bank reported a charge for legacy business provisions totalling £3.5bn, primarily for PPI claims.

As it stated earlier this month, Lloyds intends to restart dividends at a “modest level” in the second half of the year, and will have a dividend payout ratio of at least 50% of sustainable earnings in the medium term.

Chief executive António Horta-Osório is in line for a deferred shares bonus worth £1.7m, and the bank has increased its overall pool of bonuses for all staff to £395m, up from £365m the previous year. In all, 78% of that pool is in the form of shares.

UK Financial Investments, which manages the government’s 33% stake, sold a 6% shareholding in the bank last September. Chancellor George Osborne has said he wants to divest the government’s stake before the next election in 2015.

Horta-Osório said: “We see a range of opportunities to grow our business with both retail and commercial customers, supported by our revitalised Lloyds Bank and Scottish Widows brands. We also expect to apply to the regulator in the second half of the year to restart dividend payments at a modest level and to deliver progressive and sustainable payments to shareholders thereafter.”