NEARLY £4 billion ($6.06b) was added to the market value of Lloyds Banking Group Friday as its improved financial strength and 21 percent jump in quarterly profit raised hopes for higher dividend payouts.
The UK’s biggest mortgage lender’s revival under chief executive Antonio Horta-Osorio continued as it reduced its losses on bad loans by 59 percent to £177 million ($268 million), NewsNow reported.
It also improved its net interest margin – the difference between the interest it gets from borrowers and what it pays savers – and made no further provision for payment protection insurance compensation.
Underlying profit in the three months to March 31 rose 21 percent to £2.17 billion, although its statutory pretax profit dipped 11 percent to £1.2 billion after a £660 million loss on the TSB sale.
Earlier this year Lloyds said it would pay its first dividend to its 3 million shareholders, worth £535 million or ¾p a share, since its taxpayer bail-out in 2008.
Share sales since then have more than halved the government stake from 43 percent to just under 21 percent, which has returned £10 billion to taxpayers.
Horta-Osorio played down fears that a closely fought election could damage growth and expects the UK economy to grow by between 2.5-3 percent this year.
Lloyds’ net lending to small and medium-sized businesses rose 4 percent to £1.1billion over the past year.
He said: “I am pleased with the continued improvement in financial strength and performance and expect to deliver sustainable growth and improved returns.”
Lloyds has built up the biggest capital buffer among major UK lenders ahead of another round of Bank of England stress tests later this year.
Shore Capital analyst Gary Greenwood said: “Capital ratios are looking very healthy in absolute terms and versus UK quoted peers which gives us confidence it can justify a much higher dividend payout ratio this year.”
Lloyds shares rose 5½p to 82¾p.
