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Lloyds Banking brings back dividend and snaps up investment and retirement platform Embark

The bank said it will use Embark’s technology as its new pensions and retirement platform

Bank of England -

Lloyds Banking Group (LSE:LLOY) PLC declared its first interim dividend after the recent removal of the Bank of England’s cap and said it is buying investment and retirement platform Embark Group.

The FTSE 100 lender said the £390mln acquisition would complete its offering in the growing mass market and self-directed wealth management market, using Embark’s technology as its new pensions and retirement platform.

For the first half of the year, Lloyds reported a £3.9bn statutory pre-tax profit compared to a £0.6bn loss a year ago as the bank released £333mln of its credit impairment reserves made at the onset of the initial Coronavirus (COVID-19) crisis.

Net income in the second quarter of £2.74bn was just ahead of City expectations, while a statutory pre-tax profit of £2.01bn beat the £1.4bn average analysts forecast.

The bank said it is reintroducing a “progressive and sustainable” ordinary dividend policy, with an interim ordinary dividend of 0.67p per share.

Allowing for this, the half year finished with a CET1 capital ratio of 16.7%, significantly ahead of both the ongoing target of around 12.5%.

Interim chief executive William Chalmers said it was a “solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK”.

“While we are seeing clear progress in the vaccine roll out and emergence from lockdown restrictions, the coronavirus pandemic continues to have a significant impact on the people, businesses and communities of the UK.”

Lloyds shares were up 0.8% to 47.16p in mid-morning, still down from their 12-month highs just above 50p last month.

Analysts at UBS said underlying profit before tax and remediation was 53% above the consensus forecasts, with net interest income 1% ahead of estimates, operating expenditure 1% higher and the dividend higher than the 0.56p average City estimate.

They noted that Lloyds release of expected credit losses was similar to Barclays, while analysts had expected £283mln charge rather than a credit, and now expects “modest” upgrades to consensus profit forecasts.

Noting that rivals have announced share buybacks but Lloyds has "jealously guarded its reserves", Nick Hyett at Hargreaves Lansdown said he "can’t help but wonder what it intends to do with the surplus".

    **Adds share price and broker comment**

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