Part-nationalised Lloyds Banking Group narrowed its losses to £570 million in 2012 from £3.5 billion the previous year.
The banking group, which owns Bank of Scotland, also confirmed that chief executive Antonio Horta-Osorio is in line for a bonus of almost £1.5m, but will only receive the award in 2018 if the group’s share price stays above 73.6p for an unspecified time, or if the UK government sells at least 33 per cent of its stake for more than 61p per share.
Lloyds announced an overall bonus pot of £365m for 2012, down 3 per cent compared with the previous year.
Chairman Sir Win Bischoff said: “Whilst Lloyds Banking Group continues to show restraint in its annual bonus awards, we believe our employees should be rewarded for their contribution to the further strengthening of the business in 2012. The group continues to make sure that its remuneration structure places the focus on strong customer service and the long-term sustainability of the business”.
Payment protection
The bank, which is 40 per cent owned by the taxpayer, said underlying profits rose to £2.6bn in 2012, up from £638m a year earlier.
But it set aside a further £1.5bn to compensate customers who were mis-sold payment protection insurance (PPI) products, taking its total bill to £6.8bn. It also took a £400m hit for compensation related to interest rate swaps.
Lloyds has paid out more in PPI compensation than any other bank. The products were meant to protect borrowers who found themselves out of work because of sickness or redundancy, but were often mis-sold to customers who did not want or need them, or to people who subsequently found they were unable to claim on the policies.
Laura Willoughby, chief executive of the campaign group Move Your Money, said: “Taxpayer-backed Lloyds is responsible for more mis-selling than any other British bank. Yet Horta-Osorio still sees it fit to line his pockets with our money.”
The PPI and swap provisions dragged the group to a loss of £570m for the year.