Lloyds Banking Group may be 23.9% state-owned but it couldn’t be anymore different from its fellow taxpayer-owned counterpart; the Royal Bank Scotland.
This is despite the group paying £2.2 billion in payment protection insurance related compensation and administration charges and £900 million for other litigation related issues.
It cited a reduction in the bank’s riskier assets to £16.9 billion, from £33.3 billion in 2013, for helping the lender. It also pared down its international presence from 30 countries in 2010, to now just six.
“Over the last four years we have transformed Lloyds Banking Group into a low cost, low risk, UK focused retail and commercial bank. This has been made possible by the hard work of everyone at the Group,” said António Horta-Osório, CEO at Lloyds in a statement.
“Today’s results also demonstrate that our profitability and capital position have improved significantly, and this has enabled the Board, for the first time in over six years, to recommend we pay a dividend to our shareholders. While we recognise we have more to do, we enter the next phase of our strategy from a position of strength. We will remain focused on our customers, embrace the digital age throughout the whole Group, continue our support for the UK economy and aim to deliver strong and sustainable returns for our shareholders.”
Big pay day for executives and shareholders
Subsequently, Lloyds’ board revealed that it would spread the joy amongst its shareholders and staff as it doled out millions of pounds in bonuses, bump up executive remuneration, and announced it will restart dividend payments in 2015.
Lloyds will give shareholders dividends worth 0.75p per share, which totals £535 million. Around £3 million will go to shareholders while £130 million will go to the government.
Meanwhile, Lloyds paid £369.5 million in staff bonuses in 2014, which is 3.6% lower than the year before.
“The Group believes that rewards should be strongly linked to successful performance,” said Lord Blackwell, the Group’s Chairman in a regulatory statement. “The awards announced today properly recognise the tremendous achievements over the last few years to transform the business whilst taking appropriate account of past shortfalls in business conduct.”
“In 2011 this business was still at significant risk. Today it is a low risk, low cost, customer-focused UK retail and commercial bank that is once again providing real support to the UK economy. In addition, taxpayers have started getting their money back and today we have announced our intention to pay our first dividend in over six years benefitting nearly 3 million shareholders directly and many others through their pension funds. We are dedicated to using this renewed strength to build a bank that delivers great service and great value to its customers.”
Since shares rose by 193% since 2012, Horta-Osorio received a total remuneration package of £11 million for 2014. Around £1 million of this was his basic salary while £800,000 worth of his total package was bonus. A long term incentive plan accounted for the remainder of the £11 million.
Meanwhile, according to the group’s statement, 27 employees at Lloyds earned between €1 million (£726,342) to €1.5 million (£1.1 million) while a range of others raked in as much as €6.5 million (£4.7 million) last year in salary.
Lloyds and all other banks are under European Union obligation to publish pay details of those who take and manage risks, dubbed ‘code staff.’