If RBS is still on a slash and burn diet, as it continues to shed the toxic pounds built up before the financial crash, then Lloyds is finally allowing itself to admire its trim new figure. The partially taxpayer-owned bank announced annual profits had more than quadrupled from £415m to £1.8bn in 2014. And it’s finally restarting dividend payments, for the first time in six years.
The dividend is a paltry 0.75p per share, but is hugely symbolic for an institution bailed out to the tune of £20bn back in 2008. It also means many investment and pension funds that aren’t allowed to hold non-dividend paying shares can now buy into the bank.
The Government has been gradually trimming its stake and sold off a 1% chunk for £500m earlier this week, meaning it now owns 23.9% of Lloyds, down from a peak of around 40%. It’ll get £130m from this dividend – yet another nice little pre-election boost for chancellor George Osborne, who is no doubt readying his sweeties for next month’s Budget.
Lloyds’ shares were up a modest 0.6% to just under 79p in mid-morning trading, but have more than trebled from their nadir of 23.19p in November 2011. That means chief executive António Horta-Osório gets a £7m payout from a share incentive scheme set up when he took the top job in March 2011.
Source: Yahoo Finance
He tried to head off any criticism by saying he would be hanging onto his shares (of which he owned 6.2 million at the end of 2014 and could get as many as 4.6 million in March) ‘until the Government’s stake is significantly reduced’. Not a bad performance, considering Horta-Osório had to take a month off work for stress at the end of 2011 (at the same time as the share price bottomed out), something which not so long ago would have been the kiss of death for a bank boss.
In comparison, his opposite number at RBS, Ross McEwan, took home £2.7m, after forgoing a £1m share-based bonus (not that he needs any tears shed on his behalf). Indeed, RBS is very much looking like the poorer cousin at the momentL it’s still 81% owned by the taxpayer and that doesn’t look likely to change any time soon, given it made a £3.5bn loss in 2014.
It’s not all happy days for Lloyds, though. It set aside another £700m in the fourth quarter of 2014 for PPI misselling, taking its entire provision for the debacle to an mind-boggling £12bn. Can’t win ‘em all…