By Iain Withers and Lawrence White
LONDON -Britain’s largest high street bank Lloyds posted a jump in annual profits on Thursday but was dented by further costs for past misdeeds, as the lender laid out a fresh strategy under new CEO Charlie Nunn.
Lloyds reported a pretax profit of 6.9 billion pounds ($9.31 billion), below the 7.2 billion average analyst forecast compiled by the bank.
Lloyds made a 1.2 billion pound profit a year earlier.
The bank said it would buy back 2 billion pounds of its own shares and pay a final dividend of 1.33 pence per share.
The profit miss was largely due to huge remediation charges of 1.3 billion pounds, including an additional 600 million for payouts and costs related to historic fraud at its HBOS Reading branch.
Lloyds’ higher profit comes after similarly improved results from Barclays, HSBC and NatWest, as Britain’s economic rebound and higher central bank interest rates lift lenders’ finances.
Thanks to the better outlook, Lloyds increased its key profitability goals, saying it now expects to make a return on tangible equity of more than 10% by 2024 and 12% by 2026.
Lloyds’ results were boosted by the release of 1.2 billion pounds of reserves set aside to deal with pandemic loan defaults that did not materialise.
Nunn took over at Lloyds in August to replace Antonio Horta-Osorio, who left for a short-lived, scandal-tainted stint as chairman of Credit Suisse.
He said the bank’s strategy would involve a number of efforts to broaden its sources of income including: expansion in consumer products such as motor finance and home insurance; a new mass affluent wealth management offering; and efforts to digitise its small business banking platform.
Nunn said the bank would also try to boost income from its bigger corporate clients by building its cash management and debt finance business, reversing the trend of recent years where Britain’s retail banks have pared back in corporate finance.
The sprawling group – which also includes banking brands Halifax and Bank of Scotland – has tried to ramp up fee income over recent years through insurance and pensions arm Scottish Widows and wealth joint venture Schroders Personal Wealth.
($1 = 0.7411 pounds)
(Reporting by Iain Withers and Lawrence White; editing by John O’Donnell and Jason Neely)
