Lloyds share price: FY underlying profit up 26% to £7.8 billion

on Feb 27, 2015
Updated: Oct 21, 2019

Lloyds Banking Group Plc (LON:LLOY) has this morning released its full-year results. Here are the highlights from Lloyds statement with more to follow:

**Substantial increase in underlying profit and returns**
· Underlying profit increased 26 per cent to £7.8 billion (2013: £6.2 billion); · Return on risk-weighted assets increased to 3.02 per cent (2013: 2.14 per cent); · Income of £18.4 billion, up 1 per cent excluding St. James’s Place effects in 2013; – Net interest income up 8 per cent, driven by margin improvement to 2.45 per cent; – Other income down 9 per cent reflecting disposals and a challenging operating environment; · Costs down 2 per cent to £9.4 billion (cost base of £9.0 billion excluding TSB)

· Impairment charge reduced 60 per cent to £1.2 billion; asset quality ratio improved 33 basis points to 0.24 per cent; Statutory profit before tax of £1.8 billion (2013: £0.4 billion) despite legacy items; · £2.2 billion provision for PPI in the year (2013: £3.1 billion) and a £0.9 billion provision for other regulatory items
· Statutory profit after tax of £1.5 billion (2013: loss of £0.8 billion); · Tangible net assets per share increased to 54.9p (31 Dec 2013: 48.5p); Guidance reflects confidence in the future; · 2015 full year net interest margin expected to be around 2.55 per cent; · 2015 full year asset quality ratio expected to be around 30 basis points; · Expect other income to be broadly stable in 2015; · Targeting cost:income ratio to exit 2017 at around 45 per cent, with reductions in each year; · Expect to generate between 1.5 and 2 percentage points of common equity tier 1 per annum (pre dividend); · Expected return on required equity of 13.5-15 per cent by the end of the strategic plan period (2017);

· Recommending a dividend of 0.75 pence per share in respect of 2014, amounting to £535 million
2014 was a year of continued delivery for the Group, with the achievement of the key objectives set out in our 2011 strategic plan resulting in a significant transformation of the business and improvement in performance. Strategically, we are now a low risk bank, with a strong balance sheet and funding position and industry cost leadership, all of which provide competitive differentiation.

This delivery has, in turn, enabled the UK government to make further progress in returning the Group to full private ownership. In 2014 the UK government reduced its shareholding through the second successful sale of part of its stake in March and the launch of a pre-arranged trading plan in December which provides a means for an orderly sell down that will end no later than June 2015. On 20 February 2015, we were advised that UKFI’s interest in the Group had reduced to 23.9 per cent. In the summer, we sold 38.5 per cent of TSB via a well-received Initial Public Offering, with this and the subsequent sale of a further 11.5 per cent stake in September resulting in us being firmly on track to meet our European Commission State Aid commitments.

The Board recognises the importance of sustainable and growing dividends to our shareholders and is today announcing the resumption of dividend payments, with a recommended dividend payment of 0.75 pence per share in respect of 2014. This is a symbolic development that bears testament to our successful transformation and improved risk profile of the business.

Given this strong strategic progress and the improvement in our financial performance and position, we have a firm foundation to deliver the new strategic priorities that we set out in October and we are well placed to continue to support and benefit from the strengthening UK economy and to be the best bank for our customers and shareholders.
As of 07:07 GMT, Friday, 27 February, Lloyds Banking Group share price is 78.50p.