Lloyds Banking Group, which has not paid a dividend since the taxpayer spent £20bn bailing out the bank in 2008, has announced plans for a £535m pay-out to shareholders.
The bank will pay a 0.75p-a-share dividend, the first in more than six years, in a huge boost for the bank's 3m shareholders, most of which are UK retail investors.
Lloyds made the announcement as it reported a fourfold increase in pre-tax profits to £1.8bn. On an underlying basis, seen as a more accurate indication of the company’s performance, profits were up 26pc to £7.8bn.
The bank has won permission to pay a first dividend since 2008 from the Bank of England, after improving profits strengthened its capital position significantly.
The Treasury, which owns a 23.9pc stake in Lloyds, is currently due around £130m of the dividend pay-out. George Osborne said the dividend was a “milestone” for the UK economy.
“Today's results are another major milestone in the recovery of the British economy from the Great Recession and the bank bailouts,” Mr Osborne said.
“This is good news not only for taxpayers, who will get at least another £100m from the dividend, but also for millions of savers who hold Lloyds shares or have money invested in Lloyds through their pensions.
“Thanks to the strengthening economy and the turnaround at Lloyds, we have already recovered almost £8bn of taxpayers' money, reducing our shareholding below 24pc.”
The bank applied for permission to repay dividends at the start of the month, as reported by the Telegraph, and received permission from the Bank of England this week.
Lloyds said its bonus pool was £369.5m last year, smaller as a percentage of profit than in 2013.
Profits in the final quarter of the year took a £700m hit as the bank continued to set aside more money related to the PPI scandal. Provisions for PPI have now cost the group £12bn.
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