Lloyds Banking Group is paying its first dividend in over six years since it was bailed out during the financial crisis – which cost British taxpayers 20 billion pounds.
The company announced it would pay a dividend of 0.75 pence for the 2014 financial year.
The bank appears to have recovered as it posted an increase in profit and major improvements in capital strength.
Lloyds reported underlying profit of 7.8 billion pounds, beating market expectations of 7.5 billion and well ahead of the 6.2 billion in profit it posted the year before.
Its Tier 1 ratio, an indicator of capital strength, rose by 250 basis points to 12.8 percent.
Chancellor of the Exchequer George Osborne said:
“Today’s results are another major milestone in the recovery of the British economy from the great recession and the bank bailouts,”
Osborne said that the 130 million pound dividend that the UK government will receive is going to go straight towards reducing the national debt.
The government’s stake in Lloyds has dropped since the bailout and it has raised around 8 billion pounds by selling shares. Experts believe that now that the bank is paying a dividend it will help the government sell its remaining shares.
Some are still unhappy about bonuses
Labour MP John Mann, who serves on the Treasury Select Committee, criticised Lloyds for the “obscenely high” pay package that CEO Horta-Osorio will receive – worth 11.5 million pounds.
Mann told Reuters:
“It’s obscenely high. The taxpayer hasn’t got his money back yet. He’s getting the benefits. Where’s the money back for the taxpayer? Why’s he getting so much and the taxpayer so little?,”
However, it should be noted that the amount Lloyds paid its employees in bonuses for 2014 was 4 percent less than what was handed out in 2013.