Lloyds Banking Group PLC’s move to set aside further funds to cover a potential hit from a probe into historic motor finance commission deals did little to deter investors on Thursday.
Shares jumped 7% in the wake of full-year figures, where the FTSE 100-listed lender said an additional £700 million provision had been made in the fourth quarter to cover possible remediation.
Though results showed a smaller annual profit, in part as rate cuts hit its interest margin, analysts flagged figures trounced expectations when excluding the motor finance provision.
Underlying fourth quarter pre-tax profit of £993 million was 25% below consensus, Peel Hunt analysts acknowledged.
“However, adjusting for an unexpectedly high provision for motor finance [...] there was a beat of around 13%.”
Underlying net income, which came in at £12.85 billion for the year, was also ahead of consensus, while impairment, at £433 million, was below, according to Peel Hunt.
Lloyds also unveiled a further £1.7 billion buyback and increased its full-year dividend by 15% to 13.17p, which Shore Capital highlighted was better than anticipated.
“[This] suggests management is not overly concerned about the motor finance issue spiralling out of control,” Shore Cap said.
“Overall, this appears to us to be a good performance by Lloyds,” Peel Hunt added, “[it] held the line on future guidance and acted conservatively on motor finance”.
Shares climbed to 67.23p on Thursday.