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Lloyds Banking Group (LON:LLOY) has unveiled its first dividend in more than six years as 2014 profits topped hopes, gifting a windfall to its bosses, staff and shareholders.
Lloyds, which is almost 24% owned by the British taxpayer, proposed a 0.75p per share payout as pre-tax profits lifted to £1.8bn last year, ahead of estimates and up from £415mln in 2013.
Chief executive Antonio Horta-Osório pocketed nearly £11mln in pay and bonuses, up from £6.6mln last year. Finance director George Culmer netted £5.5mln, up from £1.9mln.
The rest of Lloyds staff shared a bonus pool of £370mln, 4% down on 2013 awards on an underlying basis.
It marks the first time Lloyds has paid a dividend since the financial crisis. The payout amounts to £535mln to be split among the bank’s three million shareholders.
The British government, which has a 23.9% holding in the firm, is set to receive £130mln of the payment.
The taxpayer handed £20bln to Lloyds to keep it going in 2008, leaving it with a 41% stake which has since been sold down as the bank’s finances and market conditions have improved.
“Today's results demonstrate our profitability and capital position have improved significantly,” Horta-Osório said.
“This has enabled the board, for the first time in over six years, to recommend we pay a dividend to our shareholders.”
Broker Hargreaves Lansdown described the results as “a breath of fresh air”, given rivals’ disappointing results.
Head of equities Richard Hunter said: “The return to a dividend payment, albeit on a token basis, is a sign of confidence in future prospects and will also put income-seeking investors on alert for the first time in several years.
“Elsewhere, there are any number of positively improving metrics. The market consensus of the shares as a buy has been vindicated by these numbers.”
Lloyds said total costs of £9.4bn were 2% lower than in 2013.
However, the bank was forced to set aside a further £700mln in the fourth quarter to cover payment protection insurance (PPI) mis-selling, taking its total provision last year to £2.2bn. Underlying profit increased 26% to £7.8bln from £6.2bln last time.