(Bloomberg) — Lloyds Banking Group Plc beat forecasts with a pretax profit of 792 million pounds ($1.1 billion) in its fourth quarter, helped by a buoyant U.K. housing market and government support for its borrowers.
Britain’s biggest mortgage lender also announced a dividend 0.57 pence per share, marking the end of a year without payouts to protect lending during the pandemic. In a sign that Covid-19 continues to ravage the economy, Lloyds set aside 4.2 billion pounds over the year for loans that could default, although this is below its previous forecast.
“Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the U.K. and around the world,” Chief Executive Officer Antonio Horta-Osorio said on Wednesday, in his final set of results before he joins Credit Suisse Group AG as chairman.
Lloyds has lent 12 billion pounds to businesses through government-backed support programs during the pandemic. It joins rivals NatWest Group Plc and Barclays Plc in setting aside less than forecast for souring loans in the final three months of the year, while cautioning that the outlook was uncertain for the recovering British economy, which has suffered its worst recession in three centuries.
Lloyds’s CET1 ratio, a key measure of capital strength, rose to 16.4%, partly due to the ban on dividends and buybacks that the Bank of England relaxed in December. After dividends, this will fall to 16.2%.
The bank said its incoming CEO, HSBC Holdings Plc’s wealth head Charlie Nunn, will take up his role on Aug. 16. Horta-Osorio, who plans to leave within months after a decade in charge, pushed Lloyds into wealth management and insurance to diversify revenue. The overhaul during his tenure enabled the U.K. government to exit its holding in the bank, which it bailed out in the 2008 crisis.
The lender also set out targets for 2021, including:
Net interest margin to be in excess of 240 basis pointsOperating costs to reduce further to about 7.5 billion poundsStatutory return on tangible equity of between 5% and 7%Risk-weighted assets to be broadly stableIntention to resume “progressive and sustainable” ordinary dividend policy
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
