LONDON (AP) - London-based Lloyds Banking Group passed a milestone Friday in its recovery from the financial crisis, reporting an annual profit and announcing plans to pay a dividend for the first time since it was rescued by British taxpayers.
LONDON (AP) — London-based Lloyds Banking Group passed a milestone Friday in its recovery from the financial crisis, reporting an annual profit and announcing plans to pay a dividend for the first time since it was rescued by British taxpayers.
The bank posted net income of 1.13 billion pounds ($1.7 billion) compared with a loss of 838 million pounds in 2013. The bank plans to pay a dividend of 0.75 pence per share, resulting in a total payout of 535 million pounds.
"This is a symbolic development that bears testament to our successful transformation and improved risk profile of the business," Chief Executive Officer Antonio Horta-Osorio said in a statement.
The government responded with glee, particularly as the announcement comes two months before the May 7 general election in which Britain's recovery from the 2008 financial crisis will be a central issue. Though the payout requires shareholder approval, Chancellor George Osborne described it as good news for savers, shareholders and those whose pensions are invested in Lloyds.
"Today's results are another major milestone in the recovery of the British economy from the Great Recession and the bank bailouts," Osborne said.
The government injected 20 billion of state capital into Lloyds during the financial crisis, acquiring a 40 percent stake. Political leaders are anxious to return the bank to the private sector, both to get the government's money back and to help the recovery.
The Treasury this week said it had reduced its holding to less than 24 percent, raising about 8 billion pounds. The government will receive about 130 million pounds from the dividend.
Amid the positive news, Lloyds is still working to correct the excesses that almost led to its collapse.
The bank set aside a whopping 3.1 billion pounds to pay for regulatory and legal issues such as payment protection insurance and interest-rate hedging products that were improperly sold. Lloyds is also reviewing its activities in setting foreign exchange rates as regulators investigate allegations of market manipulation.