Lloyds: Banking Group reveals its yearly profit soared by more than 50 per cent

It was achieved as its underlying net interest income, the difference between what it makes from loans and pays out for deposits, jumped by 5 per cent to £13.8bn.

But the bank said it set aside a remediation charge of £450m to cover potential costs related to the financial regulator’s probe into historic car finance selling practices.

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The Financial Conduct Authority (FCA) last month opened a review into whether people could be owed compensation for being charged too much for car loans.

Charlie Nunn, the group chief executive, said: “In 2023 the group remained focused on proactively supporting people and businesses through persistent cost-of-living pressures, whilst financing their ambitions and growth.

"This has come alongside strong progress on our strategy and delivering increased shareholder returns, guided as always by our core purpose of ‘Helping Britain Prosper’.

“The group delivered a robust financial performance, meeting our 2023 guidance, driven by income growth, cost discipline and strong asset quality.

"This performance enabled strong capital generation and increased shareholder distributions.

“2023 was a critical year in building towards the ambitious strategy we announced two years ago, as we look to grow our business and deepen relationships with our customers.

"As demonstrated in our recent strategic seminars, we have made significant progress and are on track to meet our 2024 and 2026 strategic outcomes, helping us build towards higher and more sustainable returns.

He added: “Our strategy is purpose-driven. Building a more sustainable and inclusive future is central to this, including our commitment to supporting the environmental transition, social housing and broader purpose-aligned objectives.

"We are excited about the opportunities that lie ahead as we continue to deliver for all of our stakeholders.”

From a commercial banking perspective, Mr Nunn said Lloyds was continuing to transform the business to help companies finance their growth and navigate an increasingly tough environment.

He added in a statement to accompany the results: “Within our small and medium businesses franchise we have made significant strides in our multi-year journey to build a front-to-back digital business, including mobile-first onboarding and personalised cash flow insights.

"We are continuing to deliver targeted growth in our Corporate and Institutional Banking business through serving additional client needs, particularly by extending our competitive advantage in transaction banking, and expanding our institutional footprint. “This has helped deliver more than 20 per cent growth in Corporate and Institutional Banking underlying other income since full year 2021 as we build momentum with sustainable and capital

efficient growth.”