Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Lloyds returns to profit and prepares for divi bonanza

Lloyds returns to profit and prepares for divi bonanza

(Update) Lloyds Banking Group has moved back into the black with a pre-tax statutory profit of £415 million pounds for 2013 as the bank eyes a full privatisation and a return to dividends.

The bank's wealth division business posted a 12% profit rise to £338 in 2013. Excluding St James's Place this amounted to a £260 million profit, up 84% on the year. It said assets under management rose by 2% over the year as the business adapted to the loss of trail post-RDR.

The £415 million profit represents the first since the bank was part-nationalised six years ago and compares with a loss of £606 million in 2012, while underlying profit more than doubled to £6.2 billion. The costs of mis-selling payment protection insurance to customers and other legacy issues weighed on the bank with a £3.5 billion provision. After tax Lloyds posted a loss of £838 million in 2013, compared to a £1.4 billion loss the previous year. 

Lloyds, which is 33% owned by the government, paid £395 million in bonuses last year, representing an 8% on the previous year, percent on the year before, while chief executive Antonio Horta-Osorio. pocketed a £1.7 million share bonus for 2013 which is deferred over five years and subject to performance targets.  

On the back of improving results, chief Horta-Osorio said a resumption of dividend payments was on the cards with an expectation of paying about half its 'sustainable' earnings in dividends over the medium-term.

'We expect to apply to the regulator in the second half of the year to restart dividend payments,' Horta-Osorio, said in the statement.

The bank last paid a cash dividend in 2008 before it took over HBOS.

Lloyds attributed growth in its wealth division to strong income growth and cost reductions, which amounted to 13%. Funds under management (excluding St. James's Place and other disposals from Lloyds' international portfolio) were up 2%, largely as a result of stronger equity markets. Funds in the broader wealth, asset finance and international division stood at £151.8 billion, down some 20% on the year. At the beginning of the year, Lloyds opted to integrate what it described as its unified wealth business into its retail division.

Lloyds said it had improved client service in its wealth division through a new Private Banking Client Centre and the roll-out of a new point of sale system. However, it noted that new wealth revenue streams had been offset by a reduction in trail income on the back of the Retail Distribution Review (RDR).

The part-nationalised bank also stressed its focus on banking businesses through the announced sale of Scottish Widows Investment Partnership and its stake in St. James's Place. 

In early February LLoyds said preparations had begun for a sale of government shares to the public, following the sale of a £3.2 billion stake back in September.

At 8:45 Lloyds share price was down 3.93%, trading at 80.24 pence.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Your Business: Cover Star Club

Profile: The godfather of fund-of-hedge-funds on the sector's future

Profile: The godfather of fund-of-hedge-funds on the sector's future

When Dixon Boardman started 26 years ago ‘there were 600 hedge funds and only 100 had $100 million – it was not even a cottage industry,’

Wealth Manager on Twitter