Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, posted its fourth consecutive annual loss after earmarking 3.5 billion pounds ($5.8 billion) to compensate clients wrongly sold loan insurance and swaps.
The net loss narrowed to 838 million pounds for 2013 from 1.43 billion pounds in 2012, the London-based bank said in a statement. The loss exceeded the 519 million-pound median estimate of seven analysts surveyed by Bloomberg.
The provision brings the total Lloyds has set aside to compensate clients sold payment-protection insurance that didn’t cover them or they didn’t need to about 9.8 billion pounds, the most among the U.K.’s banks. The rising cost is hampering Chief Executive Officer Antonio Horta-Osorio’s efforts to resume dividend payments as well as the government’s efforts to reduce its 33 percent stake in the bank.
“We expect to apply to the regulator in the second half of the year to restart dividend payments,” Horta-Osorio, 50, said in the statement. In the medium term, the bank expects to pay about half its “sustainable” earnings in dividends, he added.
Horta-Osorio will receive a 1.7 million-pound bonus in stock that will vest in 2019. The bank will also pay about 395 million pounds in bonuses to employees, up from about 365 million pounds for 2012.
The bank last paid a cash dividend in 2008, before its takeover of HBOS Plc forced it to seek a 20 billion-pound bailout. The stock has gained 6 percent this year to close at 83.53 pence in London trading yesterday, above the 61 pence the government says it will break even after providing its bailout.
The bank said earlier this month that preparations are under way for a sale of government shares in Lloyds to the public. The Treasury sold a 3.2 billion-pound stake in the company to money managers in September.
U.K. banks have now set aside about 19 billion pounds in compensation for clients wrongly sold payment-protection insurance. Barclays Plc has earmarked about 4 billion pounds, Royal Bank of Scotland Group Plc 3.1 billion pounds and HSBC Holdings Plc 1.8 billion pounds.
Source: Bloomberg (by
