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Lloyds Banking Group put aside 700 million additional sterling pounds to cover the fallout from a investigation and a related court decision on the possible sale of automotive financing loans.
Lloyds announced the provision Thursday in parallel with its fourth quarter results. The bank posted legislative profits before tax of 824 million pounds sterling in the last quarter of the year, below market expectations of 1.2 billion pounds Sterling and down compared to 1.8 billion Sterling books the previous year.
The lender on rue Haute recorded a return to tangible equity – a key measure of profitability – of 12.3% for the full year, below its target of 13%. The quarterly revenues increased from year to year to 4.4 billion sterling pounds, slightly above expectations of 4.3 billion pounds sterling.
Lloyds had already reserved a provision of 450 million pounds Sterling last year to cover the potential automobile financing costs, after the Financial Conduct Authority began to probe the discretionary commissions on loans.
But analysts have since raised estimates of the potential affected to the British banking sector after the court of appeal judged that it was illegal for banks to pay a commission to car dealers without the enlightened consent of customers.
The decision prompted Lloyds CEO Charlie Nunn, to warn an “investment problem” for the United Kingdom, and the banks prompted the government to intervene to protect economic growth when the Supreme Court hears an appeal in April . But a jury blocked on Monday the treasure request to intervene in the case.
Automobile financing costs have been unwanted distraction while Lloyds enters the final section of an investment plan of 4 billion pounds sterling aimed at modernizing its operations and growing in areas less closely linked to interest rates .
Lloyds has also pushed cost reductions, in particular by the introduction of “sharing” for customers of its three brands: Bank of Scotland, Halifax and Lloyds. The lender also said this year that he would close two offices in Liverpool and Dunfermline. He also examines hundreds of jobs as part of an effort to digitize his operations.
The net margin of Lloyds’ interests – the difference between the interests it charges on loans and the rate it pays on customer deposits – increased to 2.97% in the fourth quarter; Instead of 2.95% in the previous quarter, because it benefited from so -called structural coverage which protects it against the drop in interest rates.
The group said that it remained “very committed to shareholders’ distributions” despite the automotive financing and announced its intention to reward the shareholders with a final dividend of 2.11 PENCE per share. He also said he was planning to buy up to 1.7 billion pounds sterling from his own actions.
