Lloyds Bank profit more than doubles to £4.2bn, boosted by lower PPI payouts

The bank revealed it had spent £2.1bn on conduct charges as it continues to deal with long-running scandals

Lloyds spent £2.1bn on conduct charges in 2016 as it tries to deal with the fallout from long-running scandals (PA)

Lloyds Banking Group's pre-tax profits more than doubled in 2016 as the bank paid out less in payment protection insurance compensation than it had expected.

Pre-tax profits surged 158 per cent in 2016. However, underlying profits were down slightly to £7.9bn from £8.1bn.

The bank revealed it had spent £2.1bn on conduct charges including £1bn on PPI. That was less than Lloyds had predicted and well down on the £4bn it paid out for PPI 2015 – a sign that the most costly scandal in UK banking history could soon be drawing to an end.

Lloyds boosted its staff bonus pool by 11 per cent to £392m on the back of the rising profits.

Chief executive Antonio Horta-Osorio said in a statement that the bank's success was “inextricably linked to the health of the UK economy, which has been more resilient than the market expected post-referendum”.

Lloyds is more UK-focused than competitors such as HSBC, which has a large presence in emerging markets.

“The UK’s decision to leave the European Union means the exact nature of our relationship with Europe going forward remains unclear and the economic outlook is uncertain,” Mr Horta-Osorio said.

“However, the recovery in recent years with low unemployment, reduced levels of household and corporate indebtedness and increased house prices means the UK is well positioned,” he added.

Lloyds, which owns Halifax and Bank of Scotland, announced a £2.2bn shareholder dividend, up 13 per cent on 2015. Total income was barely changed at £17.5bn, compared to £17.6bn in the previous year.

The Government still owns a stake in Lloyds of just under 5 per cent, having bailed out the bank at the height of the financial crisis in 2008.

The full-year results come a day after rival HSBC reported a 62 per cent drop in pre-tax profits for the year that included a string of one-off charges.

Barclays will announce its full-year results on Wednesday while RBS reports on Thursday.