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Lloyds makes new $2.9B mis-selling provision

Lloyds Banking Group on Thursday said its shareholders would get a special dividend of 0.5 pence a share, demonstrating its recovery from the financial crisis despite having to set aside an extra 2.1 billion pounds in the fourth quarter to compensate customers mis-sold loan insurance.

"We made a strong start in 2015 to the next phase of our strategy and have delivered a robust financial performance, enabling increased dividend payments," chief executive Antonio Horta-Osorio said.

Niklas Halle'n | AFP | Getty Images

The bank, rescued during the financial crisis at a cost of 20.5 billion pounds to taxpayers, increased full-year underlying profits by 5 percent to 8.1 billion pounds. Analysts had estimated profit of around 6.4 billion pounds, according to Thomson Reuters data.

The bank last year paid its first dividend in more than six years, a sign of its recovery from the financial crisis. It said it would pay an ordinary dividend of 2.25 pence a share, plus a special dividend of 0.5 pence, giving a total payout to shareholders of 2 billion pounds.

The government, which held 43 percent of Lloyds after its rescue, has since cut its stake to around 9 percent. But last month, finance minister George Osborne put on hold plans to sell at least 2 billion pounds of Lloyds shares to the public this year because of financial market turmoil.

The bank said its additional provision in the fourth quarter to compensate customers for mis-selling of payment protection insurance was related to proposals to impose a deadline on claims.

British banks have set aside some 30 billion pounds for the mis-selling of loan insurance, making it the costliest scandal of its kind in British banking history.

The insurance policies were supposed to protect borrowers against sickness or redundancy, but were often sold to those who would have been ineligible to claim. People have until 2018 to claim under regulatory plans intended to draw a line under the affair.

Lloyds said its bonus pool for the year was 353.7 million pounds.


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