Lloyds turnaround continues despite more charges PDF  | Print |  E-mail
Written by DANICA KIRKA, Associated Press   
Monday, 03 February 2014 07:24

LONDON (AP) — Lloyds bank, the part-nationalized British lender, on Monday set aside another 1.9 billion pounds ($3.1 billion) to cover the excesses of the past, but said it is ready to shed state ownership and pay a dividend again for the first time since the financial crisis.

The company warned it would need to set aside 1.8 billion to claims resulting from the miss-selling of payment protection insurance — bringing the total to almost 10 billion pounds. Some 130 million pounds was also set aside for interest rate hedging products that were inappropriately sold to small and mid-size businesses.

The group said in a preliminary earnings statement that the charges would result in an underlying profit of 6.2 billion pounds for 2013. The figure, which has to be confirmed in final earnings figures to be released next week, was still above analyst expectations.

Lloyds Banking Group PLC confirmed it has begun the preparatory work to sell the government's stake. The move had been telegraphed in speeches by Treasury chief George Osborne late last year. It also said it would pay a dividend for 2013, the first since the bank received a 20 billion-pound rescue from taxpayers in 2008.

"We expect to apply in the second half of 2014 to restart dividend payments and to deliver progressive and sustainable payments to shareholders thereafter," said Chief Executive Antonio Horta-Osorio. "This will be another important step in our journey to rebuild trust and confidence in our group."

Richard Hunter, the head of equities at Hargreaves Lansdown Stockbrokers, said that while the profit figure was positive, the extra charge was worrying.

"The (payment protection insurance) number is disappointing not only in terms of the cumulative figure now nudging 10 billion pounds, but also because it perpetuates concerns around when this saga will actually come to an end."

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