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Lloyds announces £1bn share buyback but profit falls short

Lloyds announces £1bn share buyback but profit falls short

Lloyds updated investors on its full-year performance this morning, announcing that its statutory profit before tax had climbed 24 percent to £5.3 billion, with a return on tangible equity of 8.9 percent.

António Horta-Osório, Lloyds Banking Group chief executive, said: "2017 has been a landmark year in which the Group has made significant strategic progress and returned to full private ownership".

At the moment 1 analyst is watching Lloyds Banking Group Plc (NASDAQ:LYG), 0 rate it "Buy", 0 "Outperform", 0 "Underperform", 1 "Sell", while 0 "Hold".

The bank outlined four areas of focus on the financial needs and behaviour of the customer of the future.

Horta-Osorio is credited with transforming Britain's biggest mortgage lender from financial crisis casualty to one of Europe's strongest banks, a process that came to an end a year ago when the government sold its final remaining stake.

In the fourth quarter it set aside £600m to cover the cost of compensating victims of the payment protection insurance (PPI) mis-selling, taking the total for the year to £1.65bn.

Horta Osario said that Lloyds would make an additional £6bn available for small business lending in the United Kingdom over the next three years and provide £10bn more to first-time buyers.

The bank stated dividend growth will continue to be a priority, and said it plans to spend up to £1bn on a share buyback, while the dividend increased by 20 per cent.

The surge in profits follows the bank's return to private ownership last summer, almost nine years after it was bailed out by the taxpayer.

It brings his total remuneration package to £6.42m, up from from £5.79m.

The group announced earlier this year that it would be axing 900 jobs, but creating 450 new ones as part of this change. The news came as the bank, which returned to full private ownership previous year, updated investors on its performance and unveiled plans to invest £3 billion in a digital push.

Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: "There's a lot to like in Lloyds' numbers, with profits rising, costs under control, and prodigious amounts of cash being thrown off to shareholders".

The net interest margin is a closely-watched profitability measure, as it highlights the difference between interest paid out on savings and the interest charged on loans, and for Lloyds it came in at 2.86% - a touch higher than its previous forecast.

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