Lloyds Sees Surge In 2013 Underlying Profit

(RTTNews) - British banking major Lloyds Banking Group Plc (LYG, LLOY.L) Monday said it expects to report full-year 2013 underlying profit ahead of analyst consensus expectations and more than double that in 2012. Further, the board expects to apply to Prudential Regulatory Authority or PRA, in the second half of 2014 to restart dividend payments.

In an update ahead of its full-year results announcement, the Group said it expects to report substantial progress on its strategic plan, and an underlying profit of 6.2 billion pounds for 2013. The Group also expects to report a small statutory profit before tax for 2013.

The firm expects full-year net interest margin of 2.12 percent, and core loan growth of 3 percent.

The analyst consensus forecast compiled by the Group for underlying profit before tax for the year totals 5.84 billion pounds, based on the average of 14 analyst models.

For full year 2012, the bank had posted statutory loss before tax of 570 million pounds, and underlying profit before tax of 2.61 billion pounds. Net interest margin in 2012 was 1.93 per cent.

Pro-forma fully loaded common equity tier 1 ratio is anticipated to be 10.3 percent at December 31, 2013, in line with the company's guidance.

According to the firm, the results and capital position reflect a further provision of 1.8 billion pounds for legacy PPI business, taken in the fourth quarter, as well as a further provision of 130 million pounds related to sale of interest rate hedging products to certain small and medium-sized businesses.

In addition, the board expects to apply to PRA, in the second half of 2014 to restart dividend payments, commencing at a modest level.

The dividend payout ratio is expected to be at least 50 percent of sustainable earnings.

Based on the bank's progress in substantially strengthening its capital position and improving its financial performance, the PRA has now confirmed that it will consider the Group's applications to make dividend payments in line with its normal procedures for other banks.

The board also noted that it will no longer issue new ordinary shares to fund discretionary payments on hybrid capital securities.

António Horta-Osório, Group chief executive said, "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."

Lloyds Banking Group is scheduled to announce its full-year results on February 13.

LLOY.L is currently trading at 81.19 pence, down 2.11 pence or 2.53 percent, on a volume of 67.07 million shares.