Lloyds hails 'landmark' after return to private sector

Lloyds Banking Group has reported strong full year profits in its first year as a fully private enterprise.

Pre-tax profit for 2017 was £5.3bn, 24% higher than a year earlier, and the bank's highest profit since 2006.

Chief executive Antonio Horta Osorio said it had been "a landmark year", and announced that the bank planned to spend up to £1bn buying back shares.

The government sold its last shares in Lloyds in May, eight years after pumping in £20bn to save it.

Lloyds, Britain's biggest mortgage provider, also said it would invest £3bn in new technology and staff as part of a three-year plan focused on expanding its digital services.

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"Our customers want better products they want more convenience. They want safer products," Mr Horta Osorio told BBC Radio 4.

He said the bank planned to lend an additional £6bn to small businesses in the UK over the next three years and provide £10bn more to first time buyers.

The increased investment is part of Lloyd's efforts to adapt to changing consumer banking habits.

The bank also said it had put aside an extra £600m in the fourth quarter of last year to pay compensation over mis-sold payment protection insurance (PPI) claims.

This takes the bank's total PPI costs for the year to £1.6bn.

Mr Horta Osorio has overseen a programme of bank branch closures, including job losses, since he took over in 2011. At that time the government still held a 43% stake in the bank.

Mr Horta Osorio said last year had marked a step-change for the group after the government sold its last remaining shareholding.

"We were, last year, able to give all of tax-payers' money back and some more, which was a big moment of pride for all at Lloyds Banking Group."

Richard Hunter, head of markets at Interactive Investor, said the results were "slightly below expectations", but said most measures showed "strong improvement".

"With the shackles of the government share stake now removed, Lloyds has been able to concentrate fully on financial growth and repair," he added.

Neil Wilson at ETX Capital said: "Lloyds is increasingly looking like a bank firing on nearly all its cylinders. Guidance for the year ahead and beyond looks very robust."

Lloyds has already announced there will be more than 900 job losses as the group focuses away from High Street branches and towards online services. But the bank said it would also be creating new posts.

Lloyds Banking Group includes Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows.

Laith Khalaf at Hargreaves Lansdown said investors were likely to welcome these results.

"The combination of the dividend and the new share buyback scheme means shareholders are getting a pretty tasty 6% return on their investment," he said.