It’s been a significant turnaround for the Lloyds Banking Group – but one that comes with a slight caveat relating to its insurance business.
The company announced its highest full-year profit for a decade earlier today with pre-tax profits at £4.2 billion – more than double the level it achieved during 2015. The performance bucked expectations that the Brexit vote could squeeze profits.
“Our performance is inextricably linked to the health of the UK economy which has been more resilient than the market expected post referendum,” Lloyds’ Chief Executive Antonio Horta-Osorio said in a statement.
However, during the year, the company’s general performance business suffered a slight fall back with gross written premiums dropping by 3.5% at £1.1 billion compared to £1.15 billion one year earlier.
Its underwriting operations also suffered a blow as its combined operating ratio increased by two percentage points to stand at 85% instead of 83% a year earlier.
According to Lloyds the primary reason for the COR increase was a climb in expenses and a £28 million levy for Flood Re.
The company however, is confident going forward as it has launched a home insurance offering online that has already led to an increase in direct sales.
Lloyds Bank was rescued by a £20.5 billion taxpayer buyout during the financial crisis of 2008 and also closed a number of branches and announced a large number of job cuts. The company states that further cost cutting is likely due to low interest rates.
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