Lloyds Banking Group PLC Confirms Dividend Restart


The shares of Lloyds (LSE: LLOY) (NYSE: LYG.US) were down 2% to 82p during early trade this morning after the bank announced that it expects to resume dividend payments in the second half of 2014, following an improvement in capital strength. The stock has risen 64% over the last 12 months.

In a statement, the taxpayer-backed bank announced it achieved an underlying profit of £6.2 billion in 2013, more than double market expectations.

The FTSE 100 member also revealed that it is increasing its provision for the mis-selling of payment protection insurance by £1.8 billion. This reflects an increase in the number of successful complaints.

Furthermore, £130 million is to be set aside concordant to the sale of interest rate hedging products to small and medium-size businesses.

The bank stated that, subject to a return to sustainable profitability, the board will apply to the Prudential Regulatory Authority to restart dividend payments, beginning at a modest level.

António Horta-Osório, the chief executive, had the following to say:

“Over the last three years we have reshaped, simplified and strengthened the business to create a low-risk efficient Retail and Commercial bank that is focused on our customers and on helping Britain prosper. Our significant progress in delivering sustainable improvements in our capital position and our profitability, despite legacy issues, is testament to the strength of our business model and the commitment of our people, and has enabled the UK government to start to return the bank to full private ownership.

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.”

Prior to today, City experts were predicting that Lloyds’ upcoming annual results would show earnings equivalent to 7p a share. Following today’s price movement the shares may therefore trade on a P/E of 12.

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the telecoms sector — is solely your decision.

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> Mark does not own shares in Lloyds.