The group’s 2017 full year results, published today, revealed pre-tax profit of £5.3bn with an underlying return on tangible equity of 8.9%.
Underlying profit jumped 8% over the year to reach £8.5bn, revenues rose 6% to £18.5bn and net income was up 5% over the year at £17.5bn.
It also announced it will hand £1bn to shareholders with a share buyback and it will pay a dividend of 3.05 pence per share, up 20% on 2016. The total capital return to investors amounts to £3.2bn.
The group’s shares were trading up by roughly 2% at the open.
In May last year, the UK government completed the sale of its Lloyds shares and the group returned to full private ownership, nine years after taxpayers rescued it in 2008.
The bank’s chief executive, António Horta-Osório, said in a statement this had been made possible by strategic progress, strong financial performance in recent years and the hard work of the staff.
He said: “2017 has been a landmark year for the group. In May the UK government completed the sell-down of its shares and the group returned to full private ownership. This was enabled by the significant strategic progress and strong financial performance in recent years and was down to the hard work of all our people and I thank them for it.”
Looking ahead, the group said it will invest more than £3bn in four strategic priorities: enhancing its customer experience; further digitising the group; maximising the group’s capabilities; and transforming ways of working.
Horta-Osório said this strategy will drive the bank’s transformation into a “digitised, simple, low risk, customer focused UK financial services provider”.
Heading in the right direction
Helal Miah, investment research analyst at The Share Centre, said the bank was heading in the right direction after a decade-long restructuring after the financial crisis.
He said: “Going forward, net interest margins should only improve if we believe that interest rates are on an upward path and PPI claims will come to an end.
“Past restructuring and cost cutting programmes will continue to show through on its cost to income ratio which Lloyds aims to be in the low forties by 2020. However, regulatory changes will continue to put pressure on margins and the group’s focus on being a more digital bank will have IT infrastructure related spending costs in the short to medium term.”
The bank’s results come a week after it was announced it was pulling more than £100bn of assets from Standard Life Aberdeen (SLA). According to reports, Lloyds, SLA’s largest client, backed out because of a failed merger between its subsidiary Scottish Widows and SLA’s pension and assurance arm.
Star manager Neil Woodford bought Lloyds in May last year after a three-year break from the UK’s banking sector. Lloyds Banking Group is the fourth largest holding in the Woodford Income Focus fund at 5.23% of the portfolio and fifth largest in the Woodford Equity Income fund at 3.65%, according to FE data.
