Lloyds Banking Pretax Profit Soars, Resumes Dividend; Confident Of Outlook

(RTTNews) - Lloyds Banking Group plc (LLOY.L, LYG) reported Friday that its fiscal 2014 pre-tax profit more than quadrupled, with a sharp drop in impairments and higher net interest income. The company also resumed its dividends.

Looking ahead for fiscal 2015, the company expects net interest margin to be around 2.55 percent and asset quality ratio around 30 basis points. The company targets cost:income ratio to exit 2017 at around 45 percent, with reductions in each year. According to the firm, its guidance reflects confidence in the future.

For the year 2014, profit before tax soared to 1.76 billion pounds from 415 million pounds in the previous year.

Profit attributable to equity holders was 1.41 billion pounds, compared to a loss of 838 million pounds. Profit per share was 1.6 pence, compared to a loss of 1.2 pence last year.

The latest year results included 2.2 billion pounds of charges in respect of PPI, lower than last year, while other regulatory provisions were higher at 925 million pounds. Liability management losses widened to 1.39 billion pounds, while the company recorded a pension credit of 710 million pounds, compared to prior year's charge.

The impairment charge was 1.2 billion pounds, 60 percent lower than in 2013 as a result of a significant reduction in run-off business and improvements in all divisions.

Underlying profit climbed 26 percent year-over-year to 7.76 billion pounds, with a 2 percent fall in income more than offset by a 2 percent reduction in costs and a 60 percent improvement in impairments. Excluding last year's positive effects of St. James's Place, underlying profit increased 40 percent.

Total income of 18.37 billion pounds was 2 percent lower than 2013, with strong growth in net interest income offset by lower other income. Adjusting for St. James's Place effects, total underlying income increased by 1 percent.

Underlying net interest income increased 8 percent year-over-year to 11.76 billion pounds, driven by a 33 basis point improvement in the net interest margin to 2.45 percent and increased lending in key customer segments.

Other income declined 9 percent reflecting disposals and a challenging operating environment.

Further, the Board of Lloyds Banking announced the resumption of dividend payments, with a recommended dividend payment of 0.75 pence per share in respect of 2014.

In London, Lloyds Banking shares were gaining 1.44 percent to trade at 79.63 pence.