The biggest mortgage lender in the U.K.- Lloyds Banking Group Plc – announced on Friday that it will resume dividend payments after reporting the first full-year profit since its 2008 government bailout.
According to the companys statement, net profit amounted to £1.5 billion ($2.3 billion) in 2014, compared to a loss of £838 million a year ago, boosted by an improving British economy and lower costs. However, the result still trailed analysts projections of £1.8 billion due to a charge of £700 million in the fourth quarter to compensate customers who were wrongfully sold payment protection insurance.
Underlying profit, which excludes items such as restructuring charges and customer compensation, increased by 26% from a year ago to £7.8 billion. Lloyds also revealed that it has set a target of reducing its expenses from 51% of income last year to about 45% by 2017.
The U.K. government currently holds a 24% stake in the bank after gradually reducing its holding from around 40% after the £20-billion bailout in 2008. The local regulatory authorities gave the green light to Lloyds to recommend a dividend amounting to £0.75 per share for 2014, the first payout since the fiscal 2007.
Chancellor of the Exchequer George Osborne said in an e-mailed statement, cited by Bloomberg, that Lloydss earnings and dividend are a “major milestone” in the U.K. recovery.
“Over the last four years we have transformed Lloyds Banking Group into a low cost, low risk U.K. focused retail and commercial bank,” said The Chief Executive Officer of Lloyds – António Horta-Osório. “Our profitability and capital position have improved significantly. While we recognize we have more to do, we enter the next phase of our strategy from a position of strength.”
Lloyds Banking Group Plc closed 0.64% higher on Friday in London at GBX79.00, marking a one-year change of -3.26%. The company is valued at £56.39 billion. According to the Financial Times, the 23 analysts offering 12-month price targets for Lloyds Banking Group PLC have a median target of GBX86.00, with a high estimate of GBX105.00 and a low estimate of GBX55.00. The median estimate represents an 8.86% increase from the last price of GBX79.00.
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