Lloyds Bank reported a 72% slump in annual profits, reflecting the impact of the Covid-19 pandemic, but reinstated dividend payments and said it would focus on its insurance and wealth businesses.
The UK’s biggest mortgage lender on Wednesday said pre-tax profits fell to £1.2bn as impairment charges increased to £4.2bn from £1.3bn a year earlier “primarily reflecting a significant deterioration in the economic outlook” driven by low interest rates and bad loan provisions.
A final dividend of 0.57p a share was declared the maximum allowed by the Bank of England under rules imposed during the pandemic to strengthen balance sheets in the sector, and above forecasts. Lloyds said it intended to accrue dividends and resume a “progressive and sustainable ordinary dividend policy”.
Lloyds’ core capital ratio, a key measure of financial strength increased to 16.2%, ahead of an ongoing target of 12.5% and up from 15.2% in September.
“The impact of the coronavirus pandemic on the people, businesses and communities in the UK and around the world continues to be profound. Significant uncertainties remain, specifically relating to the pandemic and the speed and efficacy of the vaccination programme,” the bank said.
