Lloyds Pleases Market with Buyback Despite Profit Miss -- Earnings Review

   By Adam Clark 
 

Lloyds Banking Group PLC (LLOY.LN) reported its 2017 results at 0700 GMT on Wednesday. Here's what we watched:

PROFIT: Lloyds reported a pretax profit of 5.28 billion pounds ($7.38 billion) for 2017 compared with GBP4.32 billion in 2016. The profit figure missed analyst expectations of GBP5.89 billion, dragged down by a provision for payment protection insurance mis-selling and conduct charges.

REVENUE: Total income rose to GBP18.53 billion from GBP17.50 billion. This beat analyst expectations of GBP18.50 billion.

SHARE BUYBACK: Lloyds fulfilled expectations of increasing returns to shareholders after its return to full private ownership, declaring a share buyback of up to GBP1 billion.

PPI PROVISION: Lloyds' results included GBP1.65 billion in provisions related to claims for historic mis-selling of payment protection insurance. In the fourth quarter, Lloyds added a further GBP600 million to the amount it had already set aside for PPI, with claims on the rise ahead of a deadline for compensation in the long-running scandal.

TECHNOLOGY INVESTMENT: In a strategy update, Chief Executive Antonio Horta Osorio said Lloyds intends to invest more than GBP3 billion in strategic initiatives over 2018-2020, including further digitization. The investment was put forward as part of a drive to lower costs, with Lloyds targeting a cost-to-income ratio percentage in the low 40s by the end of 2020.

RETIREMENT SAVINGS EXPANSION: Lloyds said it intends to grow its financial planning-and-retirement business, increasing its open book assets by more than GBP50 billion by 2020 and adding more than one million new pension customers. This follows Lloyds' purchase of the U.K. pensions-and-savings business of Zurich Insurance Group AG (ZURN.EB) in October.

Write to Adam Clark at [e-mail]; @AdamDowJones

(END) Dow Jones Newswires

February 21, 2018 05:40 ET (10:40 GMT)

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