A RETURN to dividends at Lloyds Banking Group could be on the cards after its chief executive said the state-backed bank’s improving health increases the possibility of payouts.
Antonio Horta-Osorio said in an interview resuming dividends is a key target for the bank, along with allowing the Government to sell its 39 per cent stake acquired when Lloyds merged with Halifax Bank of Scotland.
However, the bank is thought to be waiting for clarity on how much cash it must retain as capital before pulling the trigger on dividends.
Mr Horta-Osorio told the Sunday Telegraph: “As we finish our legacy issues, the profitability of the bank is going to increase a lot in the future, and, given we don’t have a usage for those funds, it is obvious that Lloyds will be a high dividend-paying stock in the future, as it has been in the past.
“That will be helpful in my opinion in terms of the future privatisation.”
Lloyds has not paid a dividend since its takeover of HBOS in 2008. But the report added an announcement over dividends could be as far away as March 2015.
Mr Horta-Osorio added: “It is our duty and our relentless goal to get this bank back to normal as soon as possible – which means profitable, lending to the economy, and without legacy issues in order to pay dividends and in order to be returned to the private sector.”
The bank is tipped to show bottom-line pre-tax profits of £1.1bn for the first three months tomorrow, up from £288m a year earlier, thanks to the absence of vast mis-selling charges.
However, it was dealt a blow last week when The Co-operative Group pulled out of a deal to buy more than 600 branches from the bank. That left Lloyds forced to pursue a stock market flotation for the branches, under the TSB Bank brand. Brussels is forcing the branch sale after Lloyds’ £20bn taxpayer bailout in 2008 left the state a major shareholder.