Dividends

Note:

Interim 2020 - In order to help the Group serve the needs of businesses and households through the extraordinary challenges presented by the COVID-19 pandemic, the Board decided that until the end of 2020 we would undertake no quarterly or interim dividend payments, accrual of dividends, or share buybacks on ordinary shares.

Final 2019 - In response to a request from our regulator, the Prudential Regulation Authority, and to preserve additional capital for use in serving our customers, the Board agreed to cancel payment of the final 2019 dividend in relation to ordinary shares.

Interim 2009, Final 2009, Interim 2010, Final 2010, Interim 2011 - The Group was prevented from paying dividends on its ordinary shares as a result of the European Commission state aid review.

Final 2008 - The Group was prevented from paying dividends on its ordinary shares whilst the HM Treasury preference shares issued as part of the HM Treasury recapitalisation scheme were in existence.

Lloyds Banking Group plc (the ‘Company’) makes available a dividend reinvestment plan (‘DRIP’) to shareholders who wish to use their cash dividend to purchase shares in the Company.

What is the DRIP?

The DRIP is a low cost way to use your dividend payments to purchase additional shares in the Company, enabling you to increase your shareholding in a convenient and cost-effective manner.

The DRIP is operated by Equiniti Financial Services Limited (‘EFSL’). Rather than receiving a dividend cheque or having a bank account credited with a cash dividend payment, EFSL will use the dividends payable to DRIP participants to purchase shares on their behalf in the market, under a special low-cost dealing arrangement.

The fees and charges are located in the DRIP Terms & Conditions.

Joining the DRIP

Any shareholder wishing to join the DRIP should contact EFSL for an application form, using the contact details provided below.

Leaving the DRIP

Any shareholder who is a participant in the DRIP and who wishes to withdraw from the plan should contact EFSL for a revocation form, using the contact details provided below.

DRIP Invitation Booklet

The DRIP Invitation Booklet explains how the DRIP works and what it means for shareholders, including some frequently asked questions.

DRIP Terms & Conditions

The DRIP Terms & Conditions can be accessed here. They are also available in hardcopy through EFSL using the contact details provided below.

Online: www.shareview.co.uk/info/drip

Tel: +44 871 384 2990

Textphone: +44 871 384 2255

Calls to 0871 numbers are charged at 8p per minute from a BT landline, calls from mobiles and other networks may vary.

Each of these documents should be considered by shareholders before making any decision regarding the DRIP. Participation in the DRIP is optional and these documents do not constitute advice to join, continue to participate in, or withdraw from the DRIP. If you have any doubt about the action you should take, it is recommended that you consult your stockbroker, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000.

How does your interim dividend of 0.80 pence per share relate to your progressive and sustainable ordinary dividend policy? 

• With our H1 2022 results the Board announced an interim ordinary dividend of 0.80 pence per share, which reflects an increase of around 20% on prior year and is in line with our progressive and sustainable ordinary dividend policy. 
• You can expect to see continued progression in the dividend per share in line with this policy.

Given your excess capital position, why wasn’t a special dividend paid or a further share buyback announced? 

• With our H1 2022 results the Board announced an interim ordinary dividend of 0.80 pence per share, which reflects an increase of around 20% on prior year and is in line with our progressive and sustainable ordinary dividend policy. 
• This was ahead of the market’s consensus expectations, which are available on our website.
• As usual, the Board will continue to give due consideration at each year end to the return of any surplus capital.
• The Board remains committed to future capital distributions and the Group has stated that it expects to pay down to its capital target by 2024.

Is the Group still paying quarterly dividends? 

• No, the Group has reverted to twice-yearly dividends (this was announced at the 2021 half year results) due to:
  • simpler capital planning – having fewer distribution points makes capital planning simpler and maintains average capital levels through the year,
  • simplicity – most FTSE100 companies pay half yearly dividends, and this is easier for investors as it means less printing/cashing of cheques,
  • sustainability – reducing the amount of mailing/printing of cheques for what would often be small values. 
• In practice, this is simply a question of timing and makes no difference to the overall quantum of capital returns that an investor may expect.

Why are you buying back shares?

• The effect of a buyback is to reduce the total number of shares in issue. It is expected that shareholders who retain their shares in the company will benefit from the share buyback programme as they will own an increased proportion of the total shares in the company and should therefore see an increase in the dividend per share going forward given the reduced number of shares in issue. 
• Our issued share capital fell in the first half of 2022 (from 71,023 to 69,043m shares), as we progressed our current share buyback which was just over 60% complete at 30 June 2022. In the event of future share buybacks, you would generally expect our share count to reduce. Share buybacks can be an effective use of excess capital, particularly when the shares are trading below book value.