Lloyds Profit Rebound in 2013 to Allow Share Sale, CEO SaysGavin Finch
Lloyds Banking Group Plc will return to profitability in 2013, allowing the government to start selling its stake in the lender, Chief Executive Officer Antonio Horta-Osorio said.
“We expect this to enable us to return to profitability this year and to grow our core business, to realize our full potential to deliver strong, stable and sustainable returns for you, the shareholders, and to allow U.K. taxpayers’ investment in the group to be repaid,” Horta-Osorio, 49, said at the lender’s annual general meeting in Edinburgh today.
Lloyds, which ceded a 39 percent stake to the U.K. state after its 20 billion-pound ($30.4 billion) bailout in 2008, posted an almost threefold increase in first-quarter profit as impairments for souring loans dropped. London-based Lloyds shares have risen 27 percent this year, and closed yesterday virtually at the 61 pence a share level at which the government says it will break even.
The shares gained 2.6 percent to close at 60.9 pence in London trading, the first time the stock has risen above 60 pence since April 2011.
“We will make a statutory profit this year,” Finance Director George Culmer said on the sidelines of the meeting. “You’ll see a strong pick up in underlying profitability, which is great news and what our strategy is all about.”
Lloyds reported on April 30 that first-quarter pretax profit rose to 1.48 billion pounds from 497 million pounds a year earlier, beating the 1.03 billion-pound median estimate of nine analysts surveyed by Bloomberg. Provisions fell 40 percent to 1 billion pounds.
Lloyds Chairman Win Bischoff said this month he would retire in the next 12 months, confident the bank’s rebound from its rescue had progressed enough for him to plan his succession.
Chancellor of the Exchequer George Osborne is seeking to reduce the taxpayers’ stake in the lender before a general election due in 2015. Osborne, constrained by the biggest austerity program since World War II, could use the proceeds of a sale to fund tax cuts or more spending before the vote.
Earlier this year, the Treasury reduced the price below which it would recognize a loss from selling its stakes in Lloyds and the Royal Bank of Scotland Group Plc to take into account fees the lenders paid the Treasury, officials with knowledge of the matter said in March.
Lloyds’s bailout stemmed from its government-brokered takeover of HBOS Plc during the financial crisis. Since then, a turnaround has been hampered by about 6.8 billion pounds of redress for improperly sold loan insurance and 12.1 billion pounds of losses tied to the real estate collapse in Ireland.