By Geoffrey Smith
Investing.com — Lloyds Bank (LON:) raised its 2023 guidance and said it will buy back £2 billion of stock after delivering a 21% rise in underlying profit in the fourth quarter.
It also raised its final dividend to 160 pence a share, bringing total dividends for the year to 240 pence, a 20% increase from 2021. The buyback is in line with the last two years.
The rising interest rate environment allowed Lloyds to generate 26% more in net income from its core lending business in the quarter, as its net interest margin widened to 3.22% from 2.98% in the three months through September.
The bank expects its net interest margin to be at least 3.05% this year, up from an average of 2.94% in 2022.
At the same time, provisions against credit losses fell to £465 million (£1=$1.2111) from £668M in the previous quarter, as the economic backdrop for the U.K. started to improve at the end of the year.
For 2023, Lloyds forecast return on tangible equity – a broad measure of profitability – to be around 13%, and some 1.75% of capital generation, down from 2.45% in 2022. The amount of capital generated broadly determines how much money the bank has available for shareholder payouts.