Lloyds share price opens higher as full-year profit beats expectations

Lloyds Banking Group Plc (LON:LLOY) has this morning posted a rise in full-year profit which has enabled the blue-chip lender to start paying a dividend for the first time since it was bailed out by the taxpayer during the financial crisis.

Lloyds’ share price jumped more than one percent at the opening bell in London this morning and stood 1.35 percent higher at 79.56p as of 08:01 GMT. The shares are outperforming the blue-chip FTSE 100 index which has slipped marginally into negative territory.
Lloyds reported today in a statement that its underlying profit had increased by 26 percent last year to £7.8 billion, surpassing the £7.5 billion forecast of Reuters-polled analysts. On a statutory basis, profit after tax rose to £1.5 billion, as compared with an £800 million loss in 2013.

Lloyds’ chief executive António Horta-Osório commented in the statement that the results demonstrated that the lender’s “profitability and capital position have improved significantly, and this has enabled the Board, for the first time in over six years, to recommend we pay a dividend to our shareholders”.
The blue-chip bank today recommended a dividend of 0.75 pence per share in respect of 2014, amounting to £535 million.

Lloyds, however, announced that it had booked another £2.2 billion to cover the continued cost of repaying customers who were mis-sold payment protection insurance (PPI), on top of the £3.1 billion booked in 2013. The company also made a £900 million provision for other regulatory items.
The part taxpayer-owned lender said that bonuses for 2014 had been set at £386 million, and noted that the aggregate bonus awards as a percentage of pre-bonus underlying profit before tax had been reduced from six percent in 2013 to 4.7 percent. Lloyds said in a separate statement that its chief executive was expected to receive a deferred bonus award in the amount of 535,083 shares in the group, with the share price to be determined by the average of Lloyds’ closing share price of the five trading days prior to the date of the award.
As of 08:28 GMT, Friday, 27 February, Lloyds Banking Group share price is 78.50p.