Lloyds backs UK to escape no-deal Brexit disaster as profits surge

Lloyds Banking Group chief executive Antonio Horta-Osorio on Wednesday shrugged off fears that Britain is heading for a no-deal Brexit and presented an optimistic vision for the economy.

With the bank’s profits soaring, up 23% to £3.1 billion in the half year, Lloyds is able to raise the dividend to shareholders and claimed “strong and sustainable” growth will continue.

With businesses large and small beginning to panic over strained Brexit negotiations, Horta-Osorio backed the government.

He said there is a “very high likelihood of the UK and Europe reaching an agreement, which is clearly in the interests of both parties”.

He added: “I am strongly convinced that there is a strong possibility of a deal being reached by November. That’s exactly what companies in the UK need.”

When Horta-Osorio arrived in 2011, Lloyds was nursing an annual loss of £260 million. The shares remain stubbornly low, a reflection of investor fears about companies like Lloyds that are entirely focused on the UK.

Laith Khalaf at Hargreaves Lansdown said: “Antonio Horta-Osorio must be wondering just what he has to pull out of the bag to push the stock price up. Lloyds shareholders are being paid to wait. The bank is expected to deliver a total dividend of 3.44p this year, equivalent to a 5.5% income yield. Not bad.”

The shares moved up 1% to 63p, flat on when he arrived in March 2011.

Lloyds today set aside another £460 million for PPI mis-selling claims, taking the total to a mammoth £19.2 billion. It expects 13,000 new claims a week until the August 2019 deadline. Rivals have pointed to intense competition in the mortgages market.

Lloyds agrees and says it is “not chasing” growth in that area as it tries to show its lending book is of sound quality.

It bought credit cards business MBNA a year ago for £1.9 billion but today signalled further big deals are off the table. A bid deal is “not in our current strategy”, said Horta-Osorio. “Nothing which would be material” is being considered, he added.

Lloyds predicts GDP growth this year of 1.5% and predicts just one rate rise in each of the next three years, starting tomorrow.

The Portuguese said: “I think the British economy is growing in a robust way. The fact that the pound has depreciated is also helping. That is compensating for some uncertainty that exists with our corporate customers.”