Lloyds Declares Dividend; Buys Retirement Platform

Lloyds Banking Group has announced its latest financial results, with a £2 billion profit in the three months to the end of June. As a result, the banking institution has declared it will be making dividend payments for the first time since the Bank of England removed its cap.

Alongside these positive financial results, the group has also stated that it is buying the investment and retirement platform Embark Group for £390 million.

A positive swing

The £2 billion profit for the April to June period contrasts heavily with the £676 million losses for the same period in 2020, when of course the bank had to set aside £2.4 billion to cover the potential losses caused by defaults as a result of the COVID-19 pandemic.

Of that fund set aside, the bank has said it can now release £333 million of the emergency fund due to the increased success of this year, and the improved financial outlook of the UK’s economy as a whole.

The reported profits far exceeded expectations — analysts had predicted that the company would report a profit figure closer to £1.2 billion. For the actual profit to exceed that by 66% shows a very positive outlook for the banking industry as a whole.

The group has also declared that mortgage lending has increased by 2% — around £6.6 billion — since the end of March, which means that the home loan portfolio of the group now stands at around £300 billion, despite a lot of competition and low rates from competitors

The dividends being reintroduced are payments at 0.67p per share. It follows the temporary ban on dividend payments placed on all banks by the Bank of England at the start of the pandemic. The restrictions were relaxed in January and fully removed in early July.

“The group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK… while we are seeing clear progress in the vaccine rollout and emergence from lockdown restrictions, the coronavirus pandemic continues to have a significant impact on the people, businesses and communities of the UK.”

Lloyds’ interim chief executive, William Chalmers

Embarking on a new investment

The new investment in Embark Group by the Lloyds Banking Group is an indication that it is secure enough to begin growing its portfolio and potential earnings. The lender has said that Embark’s technology will allow it to complete its offering in the growing self-directed wealth management market, giving customers with Lloyds a better choice for retirement investments.

It’s seen as a significant investment, and analysts are calling it the most important deal for the banking group since the 2008 bailout by UK taxpayers that gave the bank a £20 billion injection of capital.

Embark was formed in 2021 by Phil Smith, the current chief executive. It has around 500,000 existing customers and has itself already invested in acquisitions, most notably Zurich’s investment and retail platform.