Published: Wed, February 21, 2018
Money | By Armando Alvarado

Lloyds announces £1bn share buyback but profit falls short

Lloyds announces £1bn share buyback but profit falls short

On an underlying basis, profits rose 8% to £8.5 billion.

Lloyds Banking Group set aside another £1.65 billion to compensate the victims of the PPI scandal during 2017, on the back of increased customer complaints.

At the moment 1 analyst is watching Lloyds Banking Group Plc (NASDAQ:LYG), 0 rate it "Buy", 0 "Outperform", 0 "Underperform", 1 "Sell", while 0 "Hold".

António Horta-Osório, Lloyds' chief executive, said in a statement: "The external environment is evolving rapidly and I am confident that this exciting and ambitious plan, with the significant additional investment, will mean we remain at the forefront of United Kingdom financial services, and continue to deliver our mission of helping Britain prosper".

The 24 percent rise in profit to 5.3 billion pounds beat last year's 4.2 billion but fell short of the 5.73 billion expected by analysts in a poll provided by the bank.

Chief executive António Horta-Osório described the year as "landmark" and said that the group had "made significant strategic progress and returned to full private ownership".

"Past restructuring and cost cutting programmes will continue to show through on its cost to income ratio which Lloyds aims to be in the low forties by 2020".

Lloyds also plans to beef up its financial planning and retirement business, expanding its corporate pension customer base by a million.

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The results covered a year in which Britain's biggest high street lender was fully returned to private sector ownership after its rescue during the financial crisis.

Mr Horta-Osorio said: "I've always been a strong believer in branches".

In 2017 the Bank announced the acquisition of Zurich's workplace pensions and savings business.

He said: "Although the precise nature of the UK's future relationship with Europe remains unclear and the economic outlook is therefore uncertain, the economy has been resilient".

The bank was returned to full private ownership in May past year, after the government sold off its remaining shares. That takes the total PPI costs for the year to £1,650 million.

In total, the PPI scandal has already cost Lloyds nearly £19 billion, although £2.4 billion of this has yet to be paid out.

In its strategy update, Lloyds said it planned to use new technologies to "make banking simple and easier for customers whilst reducing operating costs" over the next three years.

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