Lloyds Banking Group PLC (LSE:LLOY) has confirmed it is today launching its £2bn share buyback programme, to be executed by UBS.
The Swiss bank’s London office will conduct the share purchasing programme with trade decisions being made independently from the company, Lloyds said in a statement to the stock exchange.
It noted that a maximum of £2bn worth of Lloyds shares will be bought and the programme will complete before the end of 29 December.
Lloyds noted that it intends to cancel all shares acquired through the programme.
Yesterday, the UK high street bank’s shares dropped more than 2% after it reported flat annual profits alongside guidance which disappointed some in the City.
Lloyds reported pre-tax profit for the year to 31 December 2022, of £6.93bn, little changed from £6.90bn in 2021, and broadly in line with City expectations for £6.95bn.
Net income of £18.0bn, up 14%, was supported by continued recovery in customer activity and UK Bank Rate changes, while underlying net interest income jumped 18%, primarily driven by a stronger banking net interest margin of 2.94% in the year - 3.22% in the fourth quarter.
But the bank booked a £1.5bn impairment charge for the year and £0.5bn in the fourth quarter, reflecting a deteriorating economic outlook.
Shareholders were rewarded with a final dividend of 1.60p making a total dividend of 2.40p, up from 2.00p in 2021, while the strong capital position prompted the bank to announce a £2bn share buyback. The pro forma CET1 ratio of 14.1% remained ahead of the ongoing target of 12.5%.
Lloyds said it intends to maintain a “progressive” dividend policy and expects to pay down to its target CET1 ratio by the end of 2024.