Lloyds Bank increases its 2016 full year dividend by 13%

DividendMax Ltd.

Lloyds Bank increases its 2016 full year dividend by 13%

Good underlying performance with strong improvement in statutory profit

Underlying profit of £7.9 billion (2015: £8.1 billion); underlying RoRE of 13.2 per cent and RoTE of 14.1 per cent

Total income of £17.5 billion (2015: £17.6 billion)

- Net interest income of £11.4 billion (2015: £11.5 billion) with improved margin of 2.71 per cent

- Other income at £6.1 billion, up in the fourth quarter but slightly lower (1 per cent) than in 2015 (£6.2 billion)

Operating costs 3 per cent lower at £8.1 billion. Market-leading cost:income ratio improved to 48.7 per cent with positive operating jaws

Asset quality remains strong with no deterioration in underlying portfolio. Asset quality ratio of 15 basis points

Conduct charges of £2.1 billion include £1.0 billion provision for PPI taken in the third quarter

Statutory profit before tax of £4.2 billion, more than double the £1.6 billion statutory profit in 2015

Strong balance sheet and capital generation

Strong balance sheet with a pro forma common equity tier 1 (CET1) ratio of 13.8 per cent (31 December 2015: 13.0 per cent) after dividends; 14.9 per cent pre dividend. Prudently retaining c.80 basis points of capital for the announced MBNA acquisition

CET1 capital generation of c.190 basis points, pre dividend, ahead of guidance due to underlying performance and lower risk-weighted assets

PRA Buffer reduced reflecting de-risking of the balance sheet. The Group will continue to target a CET1 ratio of c.13 per cent given expected future regulatory capital developments

Leverage ratio on a pro forma basis increased to 5.0 per cent (30 September 2016: 4.8 per cent; 31 December 2015: 4.8 per cent)

Tangible net assets per share of 54.8 pence (30 September 2016: 54.9 pence; 31 December 2015: 52.3 pence)

Our differentiated UK focused business model continues to deliver for customers and shareholders

Cost discipline and low risk business model providing competitive advantage

Good progress in improving products and propositions to better meet customers' evolving needs and preferences

Helping Britain prosper through continued support to SMEs, first-time buyers and growth in consumer finance

Acquisition of MBNA prime UK credit card business will support strategic goal to grow in consumer finance; expected to deliver strong financial returns and create significant shareholder value

UK government continues to reduce its shareholding through trading plan, with stake now below 5 per cent

Guidance reflects confidence in the Group's future prospects

Net interest margin for 2017 expected to be greater than 2.70 per cent (before impact of MBNA)

Asset quality ratio for the full year 2017 expected to be around 25 basis points (before impact of MBNA)

Continue to target a cost:income ratio of around 45 per cent exiting 2019, with reductions every year

Now expect RoRE of between 12.0 and 13.5 per cent and RoTE of between 13.5 and 15.0 per cent in 2019

Group now expects to generate 170−200 basis points of CET1 capital per annum, pre dividend

Increased ordinary dividend and payment of special dividend

The Board has recommended a final ordinary dividend of 1.7 pence per share, making a total ordinary dividend of 2.55 pence per share, an increase of 13 per cent on 2015 and in line with our progressive and sustainable ordinary dividend policy

In addition, the Board has recommended a special dividend of 0.5 pence per share


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