Lloyds Bank profits jump 158% in 2016

Lloyds Banking Group has posted a huge increase in profit before tax, rising by 158% to £4.2bn in 2016 compared to £1.6bn the year before.

The bank, which was bailed out by the British taxpayer at the height of the financial crisis, reported that its bottom line benefited from lower compensation costs associated with the payment protection insurance (PPI) scandal.

Lloyds has already been forced to fork out more than £16bn over the issue - by far the biggest share of PPI policies.

It has set aside just £1bn to handle further claims in the coming year after the Financial Conduct Authority (FCA) put a June 2019 deadline on all applications for compensation.

The bank also said its performance was "inextricably linked to the health of the UK economy, which has been more resilient than the market expected post (Brexit) referendum".

Lloyds is still part-owned by the UK taxpayer, although the initial 43% stake has been reduced to less than 5% amid efforts by the government to return the lender to private hands.

A report on senior pay also released by Lloyds on Wednesday revealed that chief executive Antonio Horta-Osorio's total pay package was cut from £8.7 million in 2015 to £5.5 million last year.

As reported by Sky News last week the drop was due to a decline in Lloyds' share price following the Brexit vote in June of last year, which impacted on Horta-Osorio's long-term shares award.

But the pay cut has been offset by an increase to the Portuguese businessman's short-term bonus which grew from £850,000 to £1.2m.

Lloyds shares closed the day 4.4% higher.