The statutory profit after tax was recorded at £1.4bn with both figures recorded impacted by lower income and an increased impairment charge of £4.2bn.
Lloyds say that this increased impairment charge, £3.8bn of which was within the first half, reflects a deterioration in the economic outlook and ongoing uncertainties as a result of coronavirus.
Net income fell 16% to £14.4bn, with net interest income being recorded at £10.8bn, a 13% decline.
Their open mortgage book was up £7.2bn in 2020, including £10.2bn in the second half and with a reportedly strong pipeline.
Lloyds reported that they granted 489,000 mortgage payment holidays, equating to balances of £61.9bn.
As at 16 February 2021, the results revealed that 98%, or around 479,000, have matured with 89% of those having resumed repayments, 5% having extended and 5% having missed payment.
The average LTV of customers extending their mortgage payment holidays and still in extension is at 50%, compared to 44% for the total mortgage book.
The results detailed that the board has recommended a final ordinary dividend of 0.57 pence per share, which is the maximum allowed under the regulator’s guidelines.
Lloyds recorded a net interest margin of 2.52% which the group says reflects lower rates, actions taken to support customers and changes in asset mix, including growth in high quality UK mortgages and lower levels of unsecured lending.
In his group chief executive statement, current chief executive Antonio Horta-Osorio revealed that Charlie Nunn has been appointed as his successor.
Nunn was previously global chief executive of wealth and personal banking at HSBC.
Horta-Osorio said that “Charlie will find a warm welcome at Lloyds Banking Group and a deep commitment from all of our people to deliver on our purpose and to Help Britain Recover.
“I am sure that he will find his time here as fulfilling and fascinating as I have done and I wish him the very best.”
Rob Murphy, managing director of Edison Group, said of these latest results: “Lloyds Banking Group PLC today reported better than expected results for the fourth quarter of 2020 on lower loan impairment charges, a similar trend to the rest of the sector.
“For the full year 2020 pre-tax profits fell sharply by 72% to £1.2bn. The fall in profits was largely the result of elevated impairment charges as a result of the pandemic, but lower interest rates and lower customer activity also led to revenues falling 16% to £14.4bn with net interest income down 13% to £10.8bn. Earnings per share were down 66% to 1.2 pence.
“Nevertheless, the strong CET1 capital ratio of 16.2% enabled the group to resume dividend payments of 0.57p per share, the maximum allowed by the regulator.
“The report noted annual growth of £7.2bn in open mortgage book net lending, including £6.7bn growth in Q4 2020.
“Loans and advances remained relatively consistent with 2019 at £440bn, whilst total customer deposits reached £451bn up £39bn.
“Net interest margin is expected to stay above 240 basis points in 2021.
“The banking group’s strategic review for 2021 emphasised key areas of focus for expansion including banking, insurance and wealth, alongside further digitalisation of operations.
“Looking ahead, investors will keep a keen eye on how incoming group chief executive Charlie Nunn will use these pillars to navigate an unpredictable economic landscape whilst upholding the group’s commitments to supporting SMEs and ESG initiatives.”
