Mortgage lending at Lloyds has steadily fallen since 2014, after the group posted a 13% annual boost to new mortgage advances from 2013 to 2014.
According to the lender’s results for 2016, annual profit before tax surged by 158% last year, totalling £4.2bn – a 10-year high.
Underlying profit at the group fell by 3% in 2016, down to £7.9bn. Income was slightly lower last year, Lloyds said, but this was offset by lower operating costs, delivering an improved cost to income ratio of 48.7%.
Helal Miah, investment research analyst at The Share Centre, said Lloyds had beat analyst expectations despite being faced with restructuring costs of £622m during the year.
“The profit will undoubtedly be a boost to the British government, given that it hopes to restore Lloyds to full private ownership in the next few months after the bank was bailed out by the tax payer in the 2008 financial crisis,” she said.
Lloyds set aside a £1bn provision in 2016 to cover further operating costs and redress relating to misselling of payment protection insurance. Complaint levels in the second half of 2016 were around 8,300 per week on average.
Despite this, Lloyds posted a recommended increase in its dividend payment to shareholders, increasing from 13% to 2.55p per share, citing a “significant amount of capital generated in the year”.