PPI hits Lloyds gains as bank reports 26% drop in pre-tax profit
The staff bonus pool is cut, as is the chief executive's pay, as the lending giant reports its results for 2019.
Thursday 20 February 2020 16:49, UK
Lloyds Banking Group has posted a 26% drop in pre-tax profits to 拢4.39bn for 2019.
The bank said it had reached a settlement with the Official Receiver over the mis-selling of payment protection insurance.
While the terms were not revealed, it was included in the £2.5bn set aside by the bank for the issue.
Lloyds said that other misconduct issues hitting its performance included its treatment of customers affected by fraud at its HBOS Reading branch.
Staff were among those to pay the price, with the bank cutting its bonus pool by a third to £310.1m.
Chief executive Antonio Horta-Osorio's pay was also cut by 28% to £4.73m. Mr Horta-Osorio will see his pension drop to 15% of basic salary, down from 33%, as part of efforts to narrow the gap between executive pay and the wider workforce.
Mr Horta-Osorio insisted the bank's results for 2019 were "resilient", with underlying profits down by 7% to £7.5bn.
He said: "In 2019 the group has continued to make significant strategic progress while delivering solid financial results in a challenging external market.
"Throughout 2019, UK economic performance has remained resilient in the face of significant political and economic uncertainty, supported by record employment, low interest rates and rising real wages.
"Although uncertainty remains given the ongoing negotiation of international trade agreements, there is now a clearer sense of direction and some signs of an improving outlook."
Lloyds also reported that its impairments on bad loans hit £1.3bn, up from £937m the previous year, due to weakening second-hand car prices affecting its motor finance business and two large company failures hitting its commercial division, possibly suggesting trouble ahead for the UK economy.
Shares rose 1.4% on the day.