Lloyds Banking Group said it will continue to target mortgage lending as a growth area this year and expand into financial planning and pensions, as it announced a 24 per cent increase in profits for the year to 31 December 2017.
The company announced full-year results today (21 February) plus a strategic plan for the next year.
The bank stated dividend growth will continue to be a priority, and said it plans to spend up to £1bn on a share buyback, while the dividend increased by 20 per cent.
Antonio Horta Osorio, chief executive of Lloyds Banking Group, said the business "will deepen customer relationships, grow in targeted segments and better address our customers' banking and insurance needs as an integrated financial services provider."
This will see the bank increasing financial planning and retirement open book assets by more than £50bn by 2020 with a bid to attract more than one million new pension customers.
On the current fortunes of the bank, Mr Horta Osorio said the economic outlook remained uncertain in the UK due to continued Brexit uncertainty but there was no pick-up in the level of bad loans held by the company during the year.
The company said it expects its net interest margin, that is, the profit margin it makes on loans relative to the cost of acquiring the capital to lend, will increase in the next year.
The Bank of England's interest rate increase in November, and expected further increases this year, boosts all banks net interest margin.
A key measure of bank profitability, as used by bank analysts and fund managers, is the return on equity.
Analysts usually expect banks to achieve 10 per cent return on equity, in these numbers, Lloyds return on equity was 8.9 per cent, but when one off items, such as Payment Protection Insurance (PPI) costs are stripped out, the return on equity was greater than 15 per cent.
The 8.9 per cent return on equity compares with the 5.9 per cent reported by HSBC in its full year results announced yesterday (20 February).
Lloyds Bank share price was up 1.72 per cent this morning (21 February).
Lloyds also unveiled its new three-year strategy, which will involve building on the bank's digital capabilities and expanding into the Financial Planning and Retirement market, targeting one million new pension customers by 2020.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Lloyds is also looking at expanding into the financial planning and retirement market, and is targeting one million new pension customers by 2020.
"The government's auto-enrolment programme is now largely in the rear view mirror, which means Lloyds will have to pinch these new customers off someone else, so it will have to sharpen up its toolkit.
"One would expect Scottish Widows to play a pivotal role in this pensions land grab, which lends some context to the recently announced prospective withdrawal of £109bn of assets from Standard Life Aberdeen."
david.thorpe@ft.com
