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Lloyds raises rare smile - and dividend

Friday, February 27, 2015 - 02:24

Lloyds raises a rare smile for the banking sector with improved profits and its first dividend in six years. Could more good things be in the UK lender's pipeline? Ivor Bennett reports.

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Success has been hard to come by for banks of late. One though seems to have found a winning formula. Lloyds resuming dividend payments for the first time in 6 years. The UK lender was bailed out by the government in 2008 at a cost of 20 billion pounds. But underlying profits of 7.8 billion pounds in 2014 means it can finally give something back. IG's Alastair McCaig. SOUNDBITE (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "This brings them back in line with the majority of the FTSE equities out there which have performed well, and offering a pretty attractive generic dividend yield as far as the index is concerned. It will make them much more amenable as far as institutions are concerned as well." Before the crisis, Lloyds offered some of the highest dividends around. Its last payment to shareholders was 11.4 pence a share. At 0.75 pence, this offering is a lot less. But still a healthy payday for the government which will pocket 130 million pounds. Finance minister George Osborne. SOUNDBITE (English) GEORGE OSBORNE, BRITISH FINANCE MINISTER, SAYING: "We get some of the money as taxpayers, but also there are many hundreds of thousands of people with Lloyds shares in the pensions and the like, who are also getting some money. So it's big change from bailing out the banks; the banks are now paying us." Various share sales have reduced the government's stake - down from 41 percent to less than 24 now. The last sale was earlier this week, but it may be some time before the next. SOUNDBITE (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "You'd have to question in the run-up to a general election, now just at the beginning of May, how many more opportunities there might be between now and then and only maybe a sizeable squeeze on the share price might encourage them to do something before the election." Lloyds' shares rose over 1 percent in early trading. But, as ever with the banks, controversy isn't far away. Antonio Horta-Osorio's pay package the latest to come into focus. The bank's CEO will receive benefits worth 11.5 million pounds for 2014. Although the plan was set out three years ago, it's been criticised for being too generous. But with those around it still struggling, Lloyds can breath easy for now. Fellow bailout buddy RBS reported another year of hefty losses. While the tax evasion scandal continues to widen, with Coutts the latest to be investigated.

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Lloyds raises rare smile - and dividend

Friday, February 27, 2015 - 02:24