Lloyds Banking Group has posted its highest profits for a decade following a sharp fall in its redress bill for missold payment protection insurance.
Pre-tax profits more than doubled to £4.2bn in 2016 compared with £1.6bn the previous year.
Provisions for PPI fell from £4bn to £1bn for the year. The bank has so far set aside more than £17bn to cover the cost of compensation.
Underlying profits for 2016 fell to £7.9bn from £8.1bn, while total income also fell to £17.5bn compared with £17.6bn the previous year. The bank also said its dividends increased by 13 per cent with plans to pay a special dividend.
As a result of the positive performance, the total group bonus outcome has increased year-on-year to £392.9m from £353.7m in 2015. However, the impact of provisions caused a reduction in the bonus to 19 per cent from 25 per cent a year ago.
Lloyds group chief executive Antonio Horta-Osorio says: “Given our UK focus, our performance is inextricably linked to the health of the UK economy which has been more resilient than the market expected post-referendum, with GDP growth of 2 per cent in 2016.
“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.
“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.”