finance

Lloyds profit drops by nearly three quarters after Covid-19 hit



Lloyds Banking Group saw profits fall by 72% in 2020, as it battled with the economic fallout of the coronavirus pandemic.

The banking group reported that statutory pre-tax profit fell to £1.2bn, from £4.4bn the previous year – although this is better than the £905m analysts had expected, meaning it will restart dividend payouts.

It came as Lloyds booked impairment charges of £4.2bn, compared with £1.3bn a year earlier.

Again, this was lower than the £4.7bn that analysts were expecting, after the bank notched up impairments of just £128m in the fourth quarter, compared with the £586m that had been expected.

Net income dropped 16% to £14.4bn across the financial year.

Chief executive Antonio Horta-Osorio said: “Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world.

“I remain confident that the group’s clear purpose, unique business model, significant competitive advantages and the customer-focused evolution of our strategy we have announced will ensure that the group is able to help Britain recover and, in so doing, help transition to a sustainable economy.”

It is the last set of full-year results for Horta-Osorio, before he is replaced by Charlie Nunn, the head of HSBC’s high street banking unit.

After leading Lloyds for a decade, he will become chief executive of Credit Suisse later this year.

Nunn will take up the post in August, Lloyds confirmed alongside its results.

The board announced that it will be bringing back dividends, which were suspended at the beginning of the Covid-19 crisis, setting an ordinary payout of 0.57p per share, the maximum allowed under Prudential Regulation Authority guidelines.

Dan Lane, an analyst at investment platform Freetrade, said: “For context, that figure was 3.2p in 2018. Outgoing Horta-Osorio did say it was the maximum the bank was allowed to shell out at this stage in the recovery. With impairment charges of £4.2 billion set aside to deal with loans that could turn sour, maybe it’s the astute thing to do right now.

“A huge drop in profits before tax might justify the tentative return to payouts in the eyes of shareholders too.”

Don’t miss the latest headlines with our twice-daily newsletter – sign up here for free.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more