Lloyds’ 2018 profit jumps over a quarter

A sign is seen outside a branch of Lloyds Bank in the city of London. (Reuters pic)

LONDON: Britain’s Lloyds Banking Group announced surging 2018 profits on Wednesday on lower misselling costs and the “resilient” UK economy – despite looming uncertainty over Brexit.

Earnings after taxation, or net profit, soared 27% to £3.87 billion (US$5.02 billion, 4.43 billion euros) last year, compared with £3.04 billion in 2017, LBG said in a results statement.

Lloyds, which returned to full private ownership in 2017 following its financial rescue by the UK government a decade earlier, added that pre-tax profit rebounded 13% to £5.96 billion.

“Given our UK focus, our performance is inextricably linked to the health of the UK economy,” added chief executive Antonio Horta-Osorio.

“Over 2018, economic performance has remained resilient with record employment and continued GDP growth.”

In a nod to uncertainty over Britain’s looming departure from the European Union, he added, “Whilst the near-term outlook remains unclear, particularly given the ongoing EU withdrawal negotiations, our strategy will continue to deliver for our customers.”

Britain will leave the European Union on Mar 29 – but with five weeks to go, businesses are still fretting over the possibility of a chaotic no-deal departure.

The group meanwhile took another £750 million in costs during 2018 for payment protection insurance (PPI) misselling claims.

That was lower than £1.65 billion in 2017 but took the bank’s total bill for the saga to a staggering £19.425 billion.

The lender also hiked its shareholder dividend by 5% to 3.21 pence per share and proposed a share buyback of up to £1.75 billion.

That represented a total return of up to £4 billion for shareholders, reflecting its optimism over the strong economy.

“The group is planning on the basis of an orderly EU withdrawal and, given the resilience of the UK economy, intends to implement a share buyback of up to £1.75 billion,” the bank added.

The London-listed financial services giant, whose brands include Lloyds, Halifax, Bank of Scotland and Scottish Widows, operates primarily in Britain with some 27 million commercial and residential customers.