Lloyds Banking Group (LON:LLOY) announced higher annual profits but made a £4bn provision for insurance mis-selling.
Lloyds reported underlying profit of £8.1bn, up 5% or 10% excluding TSB on a 1% rise in total income to £17.6bn. Pre-tax profit fell 7% to £1.6bn.
The bank, in which the UK government still holds about 9% following a bailout in the 2008 financial crisis, recommended a final dividend of 1.5p per share, resulting in a total annual pay-out of 2.25p.
It also proposed a capital distribution in the form of a special dividend of 0.5p per share.
Following the results, shares in Lloyds rose 10.5%, to about 68p, the biggest intra-day rise since 2011.
On Thursday, credit rating agency Moody's warned that the oil price slump would increase pressure on global banks, with those in major oil exporting countries most exposed.
Moody's noted that banks' corporate lending exposures and capital market-related activity and exposures could drive downward pressure on their credit profiles, particularly banks in net oil-exporting regions.
Moody's analysts also noted that a decline in consumer spending or pressure on GDP growth driven by low oil prices could result in pressure on banks' asset quality and earnings.
On Monday, HSBC said it had taken US$500mln of impairments against loans to oil firms, although those represented only 2% of its drawn energy loan book.
Lloyds said it had a strong balance sheet with a pro-forma common equity tier 1 ratio of 13%, up from the 12.8% in 2014 and 13.9% before 2015 dividends.
Impairment charges fell 48% to £568mln and the group's asset quality ratio improved by nine basis points to 0.14%.
It has been selling non-core businesses to focus on the UK market and said it now had a simple, low-risk business.
Chief executive António Horta-Osório said the bank's financial strength, cost-cutting and lower risk focus left it well-placed in the face of market uncertainty.
"We remain confident in our ability to become the best bank for customers and shareholders, while continuing to support the economy and helping Britain prosper," he said.