Lloyds plans first dividend following strong recovery

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LLOYDS announced a 22 per cent leap in first quarter profits, boosting hopes that the bank will soon be allowed to pay its first dividend since the financial crisis.

Lloyds, which is 25 per cent owned by the Government, said it made an underlying profit of £1.8bn in the first quarter.

The bank ​also said it expects to launch a stock market float of the revived TSB business within eight weeks.

Lloyds, which owns Halifax Bank, has seen a turnaround in its fortunes since the financial crisis.

The bank, which has cut costs by slashing jobs and exiting many of its international businesses, needs permission from the Bank of England to restart dividends.

It said it will apply to the Bank in the second half of this year which means investors could see dividends reinstated next year.

Before the financial crisis Lloyds was one of the highest dividend payers in the UK, paying out just over half of its profit in 2005 and 2006.

Lloyds said the flotation of TSB will include a retail element for private shareholders, pleasing many small investors who have been excluded from a number of recent IPOs.

The group was ordered to spin off more than 600 branches under EU rules on state aid following its takeover of HBOS at the height of the financial crisis.

It has already rebranded the sites as TSB after the collapse of a deal to sell them to the Co-op.

Halifax also reported a strong first quarter, with strong demand for lending in mortgages and unsecured lending.

Halifax’s managing director David Nicholson said: “Lending is up over 20 per cent on the first quarter last year. The market and customer confidence is driving it.

“People are starting to buy things again. The car market in March was the strongest in 10 years.

“The mortgage market is very much in demand across the country. House price growth looks fairly firm across all regions,” he added.

Halifax saw good demand from people switching bank accounts and signed up 65,000 new customers in the first quarter, making it the most switched to bank in the UK.

Saphieh Ashtiany, the equality and employment lawyer

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