Lloyds Bank resumes dividends ahead of Horta-Osório’s departure

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Lloyds Banking Group PLC (LON:LLOY) said profits tumbled 72% in 2020 as COVID-19, bad debts and the impact of lower interest rates all took a toll.

António Horta-Osório, chief executive, in his last results before he leaves at the end of April did restore the dividend with a payment of 0.57p following the lifting of the ban on bank payouts by the Bank of England.

Net income for the year fell by 16% to £14.4bn reflecting lower net interest income while underlying profits dropped to £2.2bn from £7.5bn in 2019 including a £4.25bn bad charge.

Second-half impairments were much lower at £400mln inlcuding an additional £85mln for PPI in the final quarter to take its total insurance mis-selling charge to just shy of £22bn.

Profits before tax fell to £1.27bn from £4.39bn though Horta-Osório said there were encouraging signs in the second half of the year, notably a £10.2bn net rise in the number of new mortgages and increase in customer deposits.

The bank’s capital position was also strong he said, with its key capital ratio currently at 16.4% before the dividend compared to a target of 12.5%.

Horta-Osório also unveiled a new set of diversity initiatives for Lloyds, which includes a commitment to 50% women, 3% Black and 13% Black, Asian and Minority Ethnic staff in senior roles by 2025.

Lloyds has been cutting staff all through Horta-Osório’s time in charge and after the last quarterly numbers announced a further 1,070 staff would leave.

More cost-cutting is planned for the current year. In his guidance for 2021, the CEO added that Lloyds would reduce costs by a further £7.5bn while targeting a net interest margin of 240 basis points and a return on equity of between 5 and 7%.

In a separate statement, Lloyds said that its new chief executive, Charlie Nunn, would start work on 16 August 2021 with CFO William Chalmers to be acting CEO in the gap following Horta-Osório’s departure.

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