Lloyds Banking Group has reported slightly weaker than expected profit growth of 24% to £4.4 billion, but sugared the pill for investors by announcing an increased dividend and a £1.75 billion share buyback programme.
Citing a relatively resilient domestic economy in 2018, Lloyds said that net income rose 2% to £17.8 billion, in its full-year results. Operating costs fell marginally from £8.18 billion to £8.17 billion and the bank said it expects this figure to come in at less than £8 billion in 2019, a year ahead of target in its cost-cutting programme.
The £1.75 billion share buyback programme is up from £1 billion last year, while the dividend per share has been raised by 5% from 3.05p to 3.21p. Combined the two amounts equate to a £4 billion total capital return to investors.
Coming ahead of Lloyds upcoming financial advisory joint venture with Schroders, to be branded Schroders Personal Wealth, the results paint a picture of Lloyds’ existing wealth business.
It reported customer deposits of £14.9 billion in ‘wealth and central items’, with loans of £3.9 billion outstanding. This compares to figures of £14.2 billion and £0.6 billion year-on-year.
Lloyds chief executive António Horta Osório said: ‘I am clearly proud of our customer focus and financial performance. To deliver this sustainable success in the long-term we need to ensure we remain focused on enhancing customer experience. With this in mind, in February 2018 we announced our ambitious strategy to transform the group for success in a digital world, with a significant increase in strategic investment.
‘We have already made a great start in implementing the strategic initiatives which will further digitise the group, enhance customer experience, maximise our capabilities as an integrated financial services provider and transform the way we work.’
He added: ‘In addition, towards the end of the year we also announced a strategic partnership with Schroders to create a market leading wealth proposition. Continued delivery against our strategic priorities positions us well for future success and our confidence is reflected in our guidance.’
Lloyds’ shares were up 0.66p, or 1.13%, at 59.03% at 8:09am.