Lloyds profits plunge after £4.2bn put aside for Covid defaults
Profits at Lloyds Banking Group have plunged 72% after the financial institution was compelled to put aside greater than £4bn to guard itself from a possible soar in defaults linked to the Covid disaster.
Lloyds, which additionally runs the Halifax and Bank of Scotland manufacturers, reported pre-tax profits of £1.2bn for 2020, down from £4.4bn a year earlier. However, that’s increased than the £905m analysts had forecast.
The drop was right down to a surge in provisions for losses linked to loans that won’t be repaid. The financial institution set aside £4.2bn to cowl the potential defaults, in contrast with £1.3bn in 2019.
Lloyds has change into the most recent UK lender to renew dividend funds regardless of the drop in profits, with plans to pay shareholders a mixed £404m at 0.57p per share. The Bank of England lifted a ban on paying dividends in December, that was imposed final 12 months and designed to present banks a bigger money cushion to climate the Covid disaster.
The lender additionally revealed that the outgoing chief government, António Horta-Osório, was paid £3.4m in 2020 regardless of waiving a bonus value as a lot as £1.8m in mild of the pandemic. The banking boss – who’s the longest-serving chief government of a British financial institution – earned £4.7m in 2019.
The banking group additionally cancelled staff bonuses for 2020 after the pandemic put strain on its funds. Bankers beforehand shared a pot value £310m in 2019.
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Lloyds confirmed that Horta-Osório will formally step down on 30 April, days after the financial institution stories its first-quarter earnings. He was anticipated to depart by June this 12 months, having lately been chosen as the following chairman of Credit Suisse.
He can be changed by the HSBC banker Charlie Nunn.
Looking forward, Horta-Osório warned that “significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world”.
