Lloyds Banking Group has unveiled plans to restart paying dividends for the first time since it was bailed out in October 2008.
In a Stock Exchange announcement this morning the bank said it expected to apply to the Prudential Regulatory Authority in the second half of 2014 to restart dividend payments.
Lloyds said it expected initial dividends to ‘be at a modest level’ but thereafter ‘to have a progressive dividend policy with the aim of moving…to a dividend payout ratio of at least 50% of sustainable earnings.’
António Horta-Osório (pictured), Lloyds chief executive, said: ‘We expect to apply in the second half of 2014 to restart dividend payments and to deliver progressive and sustainable payments to shareholders thereafter. This will be another important step in our journey to rebuild trust and confidence in our group.’
The dividend plans come as the bank prepares to unveil a £6.2 billion underlying profit for 2013, more than double the equivalent figure for 2012.
However, the lender will set aside another £1.8 billion to cover legacy payment protection insurance (PPI) mis-selling and £130 million to pay redress over mis-sold interest rate swaps. This takes the bank's PPI redress bill to nearly £10 billion.
Lloyds also confirmed that it was working on the further sale of the government-owned stake in the lender.