Lloyds Banking Group said it will ask to restart dividend payments at a "modest" level after reporting a one-third jump in underlying profit despite another jump in the cost of compensating customers mis-sold loan insurance.
The bank, which is 25 percent-owned by the government having been rescued during the 2008 financial crisis, said it will this year ask the UK regulator for permission to restart dividend payments. The bank, historically a high dividend paying stock, has been blocked from making payouts since taking a taxpayer bailout in 2008.
Lloyds reported an underlying profit for the six months to the end of June of 3.8 billion pounds ($6.4 billion), up 32 percent from a year ago.
Profits benefited from an increased margin and improving economic conditions, with losses from bad debts more than halving to 758 million pounds.
Its net interest margin - which is the difference between the interest the bank lends at and what it pays to savers and is a key driver of income - jumped to 2.4 percent in the first half from 2.01 percent a year ago. Lloyds said it expects the margin to rise to average 2.45 percent for 2014.
Lloyds said it had set aside an extra 600 million pounds to compensate customers mis-sold payment protection insurance, however, taking its total bill to over 10 billion pounds.