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Summary
- Lloyds Group Plc reported growth in profit before tax in its half-yearly results mainly due to higher economic activities and continued business operations.
- The lender announced a dividend of 0.67p per share and plans to reintroduce a sustainable dividend pay-out policy.
- Lloyds Group also announced the acquisition of Embark Group for £390 million.
Lloyds Banking Group (LON: LLOY) is one of the largest UK based financial institutions which provides retail and commercial banking, long-term savings products and general insurance services to over 25 million customers has come up with its half-yearly results for the period ended 30 June 2021.
The bank reported a significant rise in the profit before tax of £3,905 million compared to a loss of £602 million during the same period last year. The profit surge was mainly due to improved economic outlook in the UK and continued business operation due to ease in lockdown.
However, the net interest income saw a marginal drop to £5418 million because of the lower interest rate environment and change in asset mix. The lender said that the demand for home loans continue to grow in the UK, and the group saw its open mortgage book move upwards by 2% to almost £290 billion. Bank’s basic earnings per share also improved to 5.1p per share from the loss of 0.3p per share.
Lloyds Banking Plc has reported a good number during the first half of this year after reporting loss last year due to the Covid-19 pandemic and economic uncertainty. The bank has also upgraded its outlook because of solid financial performance and improved economic outlook because of ease in lockdown restriction and higher vaccination numbers in the UK.
- Bank now expects net interest margin outlook to 250 basis points, up from the previous outlook of 245 basis points.
- Risk-weighted assets in 2021 are expected to be below £200 billion.
- Operating costs are though expected to be at £7.6 billion in the current year, up from £7.5 billion.
- Return on tangible equity is estimated at 10%, up from 8.5% to 10% outlook.
Dividend
Lloyds Banking Plc will pay a dividend of 0.67p per share to its shareholders and plans to reintroduce a sustainable dividend payout policy. The company is planning to pay dividends half-yearly rather than quarterly in the future. The company’s board said this move would give additional flexibility to the business. Lloyds bank decided to pay the dividends after the Bank of England removed dividend payout restriction last month, which was imposed on the banking institutions since April 2020 to help banks conserve cash and overcome the economic shock created by the Covid-19 led pandemic.
Acquisition of Embark Group
Lloyds Group has announced the acquisition of the Embark Group for a cash consideration of £390 million for the entire share capital. Embark Group, which operates the investment and retirement platform, serves close to 410,000 consumers and has £35 billion assets under administration. The acquisition will boost Lloyds Group online presence and serve a number of wealth management clients.
Lloyds stock is a constituent of the FTSE 100 index and has a secondary listing on the New York Stock Exchange. The stock took the support of strong earnings and was trading higher by 1.32 per cent at GBX 46.85. In the last one year it has returned over 78 per cent to the investors.
