Lloyds Banking Group has announced a 2.0 billion pound ($2.53 billion) share buyback program following better-than-expected profit results for the fourth quarter of 2023, despite facing challenges such as lower income and increased provisions.
Strong Performance in Q4
The British lender reported a pretax profit of GBP1.775 billion for the three months ending Dec. 31, exceeding the GBP1.06 billion recorded in the same period the previous year and surpassing the consensus estimate of GBP1.65 billion.
While net income dropped to GBP4.23 billion from GBP4.69 billion in the prior-year period, missing the consensus estimate of GBP4.43 billion, the bank’s net interest income totaled GBP3.32 billion, slightly under the expected GBP3.37 billion.
Margin Outlook and Cost Concerns
Lloyds Banking Group’s net interest margin for the quarter stood at 2.98%, below the anticipated 3.01%. Looking ahead to 2024, the bank expects a margin above 2.90%, slightly below analysts’ projected 2.96%, as the impact of higher interest rates diminishes.
On the cost front, the bank foresees higher expenses in the coming year, with operating costs estimated at around GBP9.3 billion, up from the previous forecast of approximately GBP9.2 billion.
Provisions and Dividend Declaration
Despite these challenges, the board declared a final dividend of 1.84 pence, resulting in a full-year payout of 2.76 pence.
