Britain’s biggest high street lender will underline the rejuvenated strength of its balance sheet on Wednesday when it announces plans to return another £1bn to investors through a new share buyback.
Sky News has learnt that Lloyds Banking Group will unveil the move alongside annual results and a new three-year strategy that will take it to the end of the decade.
The buyback of roughly £1bn will come little more than six months after Lloyds returned to full private ownership, following its £20bn Government bailout during the 2008 financial crisis.
Although Lloyds has already resumed paying dividends to shareholders, the additional distribution will reflect its board’s confidence about the outlook for the bank.
Antonio Horta-Osorio, its chief executive, has presided over Lloyds’ gradual exit from partial taxpayer ownership, cutting thousands of jobs while strengthening its capital position.
He has also had to contend with a vast bill for the mis-selling of payment protection insurance during his seven years at the helm.
The share buyback was predicted in a recent research note by analysts at Credit Suisse, who said there was scope for as much as £15bn to be returned to Lloyds shareholders by the end of 2020.
Lloyds declined to comment on the buyback plan on Tuesday night.
Mr Horta-Osorio is also expected to announce a £2.6bn investment plan for the next three years, with a strong focus on cementing Lloyds’ status as the UK’s biggest digital bank.
Alongside operational measures, he will outline the next phase of its Helping Britain Prosper blueprint, which will include making Lloyds the first blue-chip UK company to set formal targets for ethnic diversity across its workforce.
Lloyds is also expected to say that it will pay about £415m in bonuses to staff for 2017, with the increase on last year’s variable pay pool reflecting its improved performance.
At the weekend, Sky News revealed that Mr Horta-Osorio had called off talks with Standard Life Aberdeen about merging its life insurance operations with Lloyds-owned Scottish Widows following a disagreement about the ownership structure.