Lloyds profits climb 24% to record £5.3bn

Lloyds Banking Group, Britain's biggest high street lender, has reported a 24% rise in annual pre-tax profits to £5.3bn.

The bank said it was the largest profit since the group was formed, after Lloyds took over troubled rival Halifax Bank of Scotland (HBOS) during the financial crisis, before itself being bailed out by the Government.

It also confirmed plans to reward investors with a share buyback worth up to £1bn, first reported by Sky News , and a 20% increase in its annual dividend.

The results mark the latest stage in the lender's recovery under chief executive Antonio Horta-Osorio and cover a period in which the Government finally divested its remaining holdings in the business after its £20bn taxpayer rescue.

Mr Horta-Osorio said: "2017 has been a landmark year in which the group has made significant strategic progress and returned to full private ownership."

The group also revealed a rise of more than £600,000, or 11%, in Mr Horta-Osorio's pay packet to £6.42m as his basic pay rose by £95,000 and there were hikes totalling more than £500,000 in performance bonus and long-term incentives.

Mr Horta-Osorio unveiled a new three-year strategic plan which will see it invest more than £3bn, focusing on boosting its digital capabilities.

Yet Lloyds continues to be haunted by its past conduct, with a total of more than £2.5bn set aside for "legacy" issues for the year.

In the fourth quarter it set aside £600m to cover the cost of compensating victims of the payment protection insurance (PPI) mis-selling, taking the total for the year to £1.65bn.

Lloyds's overall bill for the scandal now stands at £18.7bn.

The latest provision was in part attributed to an ad campaign by the City watchdog - featuring Arnold Schwarzenegger - publicising the August 2019 deadline for complaints.

Lloyds also had to make a £325m provision in the fourth quarter to cover issues including packaged bank accounts and handling of arrears, resulting in a bill of £865m for 2017 as a whole.

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