Lloyds profits surge as bank builds on recovery

LBG, which was financially rescued by the UK government following the height of the financial crisis a decade ago, said profit after tax jumped to £3.04 billion ($4.26 billion, 3.45 billion euros) in 2017 from £2.0 billion a year earlier.

“2017 has been a landmark year in which the group has made significant strategic progress and returned to full private ownership,” LBG chief executive Antonio Horta-Osorio said in the earnings release.

Underlining the bank’s growing recovery in a “resilient” British economy despite Brexit, LBG added that it planned to return up to £1.0 billion to investors in a share buyback.

It also said it would press ahead with its digitalisation strategy.

“I am delighted to announce today our strategy for the next three years which will transform the group for success in a digital world,” Horta-Osorio said.

LBG plans to invest more than £3.0 billion in strategy initiatives, in part to “further digitise the group”, the bank said.

It added that it would “deploy new technology to drive additional operational efficiencies that will make banking simple and easier for customers whilst reducing operating costs”.

On the UK economy, LBG said it had “proven resilient”, adding that the bank’s projections “assume this performance continues” against a backdrop of the Bank of England steadily increasing its main interest rate from 0.5 percent to 1.25 percent by the end of 2020.

LBG also said it took an additional hit of £600 million in the fourth quarter to compensate customers over mis-sold insurance.

That brings the total to more than £19 billion — far in excess of any other British bank caught up in the long-running scandal.

Lloyds meanwhile returned to full private ownership in May after the government had steadily offloaded its stake by returning about £21 billion to the taxpayer.

The British government bailed out Lloyds following the 2008 world financial crisis at a cost of about £20 billion, handing the state a 43-percent stake in the bank.

The government still owns around 70 percent of Royal Bank of Scotland, which was rescued with £45.5 billion of taxpayers’ cash during the crisis in the world’s biggest bank bailout.

In 2011, British banks lost a high court appeal against tighter regulation of payment protection insurance (PPI), which provides insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards.

Regarding PPI, the insurance product became widely known after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments. British authorities have since banned simultaneous sales of PPI and credit products.