“We should see more profit coming back to shareholders in the form of dividends. Lloyds started paying a dividend earlier this year and it should pick up substantially to around 6p, and the share price should eventually reach 120p. Those people that have seen the price tripling from its low point think it does not have much further to go, but this is where share prices come into their own.
“Another step for Lloyds is getting the government off the shareholder register. The government’s share is down to around 12%, and I am pretty sure that there will be a retail offer. From an administrative point of view it could be quite annoying, but might be sensible from a regulatory point of view – it is much harder for people to be overzealous on a regulatory standpoint if there are lots of taxpayers as shareholders.
“RBS has already started the process, and as excess capital builds some will come back as a dividends, but some will also be used to buy back government shares,” he added.
