Lloyds Shares Add 21% YTD, as Buyback Boosts Holders

Lloyds' share price (LON: LLOY) is up 1.37% in trading today, bringing the impressive year-to-date return to 21.33%, barely two months in. It is not all plain sailing for the bank however, with it coming under scrutiny due to a car loan mis-selling probe, which has necessitated an increase in provisions. Initially set at £450 million, the provision for motor finance commission arrangements and sales has now been raised to a total of £1.15 billion.

In news that will be music to the ears of shareholders, Lloyds today announced a new £1.7 billion share buyback program alongside its full-year financial results, which reflect a challenging year. The announcement comes at a time when the bank is dealing with multiple financial pressures, including a decline in profits and significant provisions related to historical issues.

The buyback is part of a broader strategy to return capital to shareholders. For the full year, total capital returns are expected to reach £3.6 billion, which represents around 9% of Lloyds' market capitalisation. Additionally, the bank announced a 15% increase in the full-year dividend, raising it to 3.17 pence per share.

In terms of profitability, Lloyds reported a statutory profit before tax of £5.97 billion for the year 2024. This figure fell short of market expectations, which had forecasted profits of £6.39 billion. Despite the drop in profits, Lloyds' share price saw an increase on February 20, 2025, coinciding with the bank's announcement of the buyback program.

Looking ahead, Lloyds maintains a positive outlook regarding its return on tangible equity, expecting it to be around 13.5% in 2025 and to exceed 15% by 2026.