Lloyds Bank posts highest annual profits in over 10 years as it moves on from mis-selling scandal
Lloyds Banking Group posted its highest annual profits for a decade as it moves on from mis-selling scandals and its mammoth Government bailout in the financial crisis.
The taxpayer-backed lender said bottom line profits more than doubled to £4.24bn last year from £1.64bn in 2015, thanks largely to lower costs of compensation for payment protection insurance (PPI).
Its profit haul is the biggest since 2006 and comes as it puts the PPI saga and taxpayer bailout behind it, with the Government now holding a stake of less than 5pc and set to fully return the lender to private hands by the summer.
But the group said its performance was "inextricably linked to the health of the UK economy", which faces an uncertain outlook amid Brexit negotiations, while the impact of the referendum was laid bare on bonus payouts.
A remuneration report released by Lloyds showed chief executive Antonio Horta-Osorio's total pay package fell to £5.5m last year from £8.7m in 2015 due to a cut in his long-term shares award after the stock took a battering following the Brexit vote.
The incentive payout fell from £5.18m in 2015 to £1.58m last year.
But the group's Portuguese boss saw his short-term bonus rise from £850,000 to £1.2m and his base salary will increase by 8pc in 2017 to £1.2m, the first raise since he joined in 2011.
Staff at the bank will also share out a bonus pool worth £393m, which is 11pc higher than in 2015, despite a 19pc adjustment for PPI charges.
Lloyds said on an underlying basis, profits fell 3pc to £7.9bn.
It did not set aside any further cash for PPI, having taken a £1bn charge in the third quarter.
But the group revealed another £475m hit in the final three months of 2016 for other so-called conduct charges, such as for packaged account mis-selling, taking its total conduct provisions for the year to £2.1bn.
Mr Horta-Osorio cheered a "strong" performance as the bank nears a complete recovery from the financial crisis and PPI scandal, but said "the job is never done".
He is focusing on closing the bank's £1.9bn deal with Bank of America to buy UK credit card business MBNA and paying back the rest of the taxpayer cash from its £20.5bn bailout.
Shares in the group rose more than 3pc as it cheered shareholders with another special dividend, taking the total divi payout to £2.2bn for the year.
Richard Hunter, head of research at Wilson King Investment Management, said: "Under the careful stewardship of Mr Horta-Osorio, Lloyds has transformed into something of a modern day success story in the aftermath of the financial crisis."
Lloyds did not provide a figure for compensation for business customers who became victims of fraud at the hands of former HBOS staff, but confirmed it had begun contacting those affected and is reviewing redress.
Mr Horta-Osorio said the lender was now able to "do the right thing" for customers following the court case, which saw a group of corrupt financiers jailed earlier this month after carrying out a £245m loans scam.
The group also said it would continue to keep a tight control of costs to help offset the impact of record low interest rates on its profit margins.
Lloyds announced another 3,000 job losses and the closure of 200 branches alongside half-year results last summer as part of efforts to slash costs.