Lloyds 2018 results slightly miss analysts’ forecasts despite a 24% year-on-year rise in net profits to £4.4bn.

The UK’s largest retail bank is increasing its dividend by 5% and proposes a £1.75bn share buyback. This equates to around a £4bn payout to shareholders who have endured a disappointing year.

Lloyds share price has fallen by around 11% in the past 12 months.

Lloyds 2018 results: highlights

By two key metrics, cosy efficiency and margin, Lloyds continues to enjoy a significant advantage compared to rival RBS.

Total costs of £8.8bn at Lloyds are down 3% y-o-y, driven by a reduction in operating costs and remediation charges. As a result, Lloyds’ cost-income ratio of 49.3% for fiscal 2018 is down by 2.5 percentage points from fiscal 2017.

By contrast, rivals RBS cost income ratio for fiscal 2018 remains eye-wateringly high at 71.7%.

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On the other hand, Lloyds’ PPI long running woes are not yet over. Lloyds set aside another £750m in 2018 to settle PPI claims, taking its total PPI bill to £19.4bn.

In addition to boasting a sector beating cost-income ratio, Lloyds reports further progress on margins. In 2018 its net interest margin of 2.93% is up by 7 basis points from 2.86% in 2017.

Again by way of a quick contrast, RBS net interest margin is moving in the wrong direction. In 2018, RBS net interest margin of 1.98% is down by 15 basis points from 2017.

Lloyds 2018 results: digital success

Digitally active Lloyds Banking Group (Lloyds, Bank of Scotland and Halifax) users rose to 15.7 million in 2018.

Active mobile banking users are up by 21% in 2018 to 9.3 million, reinforcing LBG’s position as the UK’s largest mobile bank.

Lloyds says that the average LBG customer logs on to its mobile banking app 22 times per month.

Digital channels now account for 74% of LBG sales.

And Lloyds launched its Single Customer View facility in 2018. This enables over 3 million customers to view in one place pension and insurance products alongside their banking products.

Other digital highlights include the launch of API enabled Open Banking aggregation functionality.

António Horta-Osório Group CEO says:” 2018 has been a year of strong strategic and financial delivery.

Over 2018 the UK economy has proven itself to be resilient with record employment and continued GDP growth. Although the near term outlook for the UK economy remains uncertain, our strategy continues to deliver for our customers.”

Lloyds also reinforces its commitment to its branch network as part of its omnichannel strategy. It says it is committed to maintaining the country’s largest branch network, with one in five branches in the UK.

LBG kicks off 2018 with a branch estate of 1,700 outlets. This comprises 893 Lloyds branches, 609 Halifax and 198 Bank of Scotland units.

In 2018, LBG shuttered 91 outlets: 74 Lloyds, nine Halifax and eight Bank of Scotland branches.

Lloyds 2018 results: Net Promoter Score rises to 62%

According to Lloyds its net promoter score rises to 62% in 2018 and is up around 50% since 2011.

On the other hand, the second CMA survey ranking UK banking service quality reveals that LBG brands have work to do.

Since August 2018, UK banks are required to publish information on how likely people would be to recommend their bank. This includes its online and mobile banking, branch and overdraft services to friends and relatives.

The results show the proportion of customers for each brand’ extremely likely’ or ‘very likely’ to recommend each service.

For overall banking service quality, Lloyds and Halifax rank equal 8th with 60%.

Bank of Scotland ranks only 11th of the 16 brands with 58%.