LONDON: Lloyds Banking Group yesterday set aside a further £750m ($1.2bn) to compensate customers mis-sold loan insurance, overshadowing a near-doubling of third-quarter underlying profit.
Britain’s biggest retail bank, which is 33 percent owned by the government, now expects to pay out more than £8bn to deal with the UK’s most expensive consumer finance scandal. That is more than double the £3.95bn Barclays expects to pay out.
However, Lloyds’ 83 percent rise in quarterly profit, not including the mis-selling provisions, lifts its hopes of resuming dividend payments and hastening its exit from government ownership.
The bank, now Europe’s fourth-largest, is in talks with Britain’s financial regulator about dividends and will set out its dividend policy alongside its 2013 results in February.
Finance Director George Culmer told reporters the bank had entered those discussions in a good position.
“We are in a stronger capital position than some of our peers who are paying dividends, so hopefully we’ll get the right outcome,” he said.
Lloyds reported underlying profit of £1.5bn, up from £831m a year earlier and in line with analysts’ forecasts. The bank said the rise was driven by increased lending, an improved interest margin and a reduction in costs and bad-loan charges.
“The bank is back to profitability. We are back to being a normal company,” Chief Executive Antonio Horta-Osorio told reporters, adding that Lloyds will be a high-dividend stock in the future. Shares in Lloyds, which last week climbed close to a four-year high, were down by 1.9 percent at 1158 GMT.
The shares have more than doubled in value over the past year, enabling the government to start offloading the shares it acquired in a £20.5bn bailout of the bank during the 2008 financial crisis.
The government began that process with the sale of a 6 percent stake in September and Horta-Osorio said he expected another significant disposal next year.
“I think it is very likely that there will be a significant other tranche (sold) in 2014,” Horta-Osorio said, adding that he was sympathetic to the idea of private retail investors being included in future sales.
Reuters
