Lloyds Banking Profit Down, Sees Higher Margin, Lifts Dividend; Stock Up

(RTTNews) - Shares of Lloyds Banking Group plc (LLOY.L, LYG) increased around 10 percent in the morning trading in London after the bank on Thursday announced higher dividend for fiscal 2015, along with a special dividend. This was despite the company reporting lower profit in its fiscal 2015 on higher charges, despite increased net interest income. For fiscal 2016, the company projects higher margin.

For fiscal 2015, statutory profit before tax declined 7 percent to 1.64 billion pounds from 1.76 billion pounds in the prior year with increased PPI charge. Profit for the year declined 36 percent to 956 million pounds from 1.50 billion pounds in the previous year. Earnings per share were 0.8 pence, compared to 1.7 pence last year.

In 2015, the company strengthened provision for PPI by 4 billion pounds, and also charged 745 million pounds in relation to the disposal of TSB.

Underlying profit increased 5 percent to 8.11 billion pounds from 7.76 billion pounds last year. Underlying earnings per share were 8.5 pence, compared to 8.1 pence last year.

Underlying profit excluding TSB was 7.99 billion pounds, a growth of 10 percent.

Total income for the period was 17.64 billion pounds, up 1 percent from last year's 17.44 billion pounds. Net interest income rose 5 percent to 11.48 billion pounds, reflecting margin improvement to 2.63 percent from 2.40 percent a year ago.

Net interest margin's 23 basis points increase was driven by a combination of lower deposit and wholesale funding costs, partly offset by continued pressure on asset prices.

Total loans and advances to customers were 455 billion pounds, compared with 456 billion pounds, excluding TSB, at 31 December 2014.

The cost : income ratio improved to 49.3 percent from 49.8 percent in 2014 and remains one of the lowest of major UK banking peers, the company said.

Lloyds' board has recommended a final ordinary dividend of 1.5 pence per share, making a total ordinary dividend for the year of 2.25 pence per share, significantly higher than last year's 0.75 pence. In addition, the board has recommended a capital distribution in the form of a special dividend of 0.5 pence per share.

Looking ahead to fiscal 2016, Lloyds Banking said its net interest margin for the full year now expected to increase to around 2.70 percent.

Separately, the company noted that despite better underlying financial results in 2015, its total bonus outcome has reduced year-on-year to 353.7 million pounds from last year's 369.5 million pounds.

In London, Lloyds shares were trading at 68.00 pence, up 9.32 percent.