On 2 April 2020 the board announced that it had decided to cancel the 2020 interim dividend, which would have been paid on 22 April 2020, recognising the significant challenges faced by businesses and individuals and consistent with the purpose of helping the people and businesses of Britain.
Following a resilient financial and operational performance in the second half, the board is proposing a dividend of 40.0p per share in respect of the full financial year. This reflects the board's confidence in the group's business model and strong financial position, notwithstanding the current uncertain environment.
While dividend decisions in the 2020 financial year have reflected the unprecedented uncertainty caused by Covid-19, their aim remains to return to a long-term policy of progressive and sustainable dividend growth in future. Dividend decisions will continue to balance returns to shareholders with maintaining a strong financial position, flexibility to grow and invest, and the ability to meet our responsibilities to all stakeholders.
Other financial highlights include:
The group delivered a resilient performance overall, reflecting the disciplined application of their business model in a challenging environment
The loan book remained broadly stable at £7.62 billion (31 July 2019: £7.65 billion), reflecting an increase in activity since the easing of lockdown restrictions in June and July
The focuse is on on pricing and underwriting discipline, income in the year was impacted by lower activity levels and forbearance measures, resulting in a net interest margin of 7.5% (2019: 7.9%)
Impairment charges increased to £183.7 million (2019: £48.5 million) primarily reflecting the forward-looking recognition of impairment charges under IFRS 9 to incorporate the impact of Covid-19, resulting in a full year bad debt ratio of 2.3% (2019: 0.6%)
Adjusted operating profit in the Banking division decreased 61% to £99.2 million (2019: £253.7 million) primarily due to higher impairment charges
The Asset Management division generated net inflows of 9% as they continued to attract client assets and new hires despite the challenging market conditions. Adjusted operating profit decreased 6% to £20.4 million (2019: £21.8 million)
Winterflood delivered an excellent trading performance, making the most of significantly higher volumes since the Covid-19 outbreak and achieved operating profit of £47.9 million (2019: £20.0 million), up 140%
The group maintained a strong capital, funding and liquidity position. The common equity of tier 1 ("CET1") capital ratio of 14.1% (31 July 2019: 13.0%) provides over 600bps of headroom above the minimum requirement