Britain's state-rescued Lloyds bank on Friday posted a 2012 net loss of £1.43 billion, rocked by huge compensation for insurance mis-selling, but awarded its boss and staff a large round of bonuses. The loss after taxation, equivalent to $2.16 billion or 1.66 billion euros, compared with a shortfall of £2.79 billion in 2011, Lloyds Banking Group (LBG) said in a results statement.
The lender, which is 39-percent owned by the taxpayer, added that pre-tax losses narrowed sharply to £570 million, from £3.5 billion last time around. In the fourth quarter, it set aside another £1.5 billion to cover compensation for mis-selling payment protection insurance (PPI), taking its annual provision to a vast £3.575 billion. The group's total bill now stands at £6.775 billion, which makes Lloyds the worst affected bank by the mis-selling scandal. It also set aside £400 million to compensate clients who were sold interest rate hedging products.
However, stripping out exceptional items, underlying profit surged to £2.6 billion in 2012, from £638 million in 2011, as the bank cut bad debts, costs and non-core assets. It shed 7,000 jobs last year. Lloyds also revealed on Friday that chief executive Antonio Horta-Osorio would receive a 2012 performance bonus of £1.485 million that will be deferred in shares until 2018, and will be dependent on its share price level. The bank added that staff would share a total bonus pot of £365 million despite the fresh losses. That was three percent lower than in 2011, but will give each employee about £3,900 on average. Cash bonuses are capped at £2,000.
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