Lloyds Banking Group has reported a statutory pre-tax profit £4.23bn for the year ended 31 December 2016, a huge surge compared to £1.64bn a year ago.

The bank attributed the surge in profit to lower payment protection insurance (PPI) provisions, which fell to £1bn in 2016 from £4bn in 2015.

The banking group’s underlying profit stood at £7.86bn, a fall of 3% versus £8.11bn in the prior year. Net interest income remained almost flat at £11.43bn, while total income dipped 1% year-on-year to £17.5bn.

The bank’s pro forma common equity tier 1 (CET1) ratio was 13.8% at the end of 2016, up from 13% last year. Leverage ratio on a pro forma basis rose to 5% in 2016 from 4.8% in 2015.

Lloyds also announced a special 0.5 pence dividend along with a 2.55 pence ordinary dividend in 2016 taking the total dividend to 3.05 pence, a rise of 11% compared to the previous year.

Commenting on the performance, Lloyds Banking Group CEO Antonio Horta-Osorio said: “We continue to improve our customers’ experience, simplifying the business whilst growing in targeted areas and in December announced the acquisition of MBNA’s prime UK credit card business.

“Strong capital generation, which is a consequence of our business model, has enabled us to fully cover the expected capital impact of the MBNA acquisition, increase our ordinary dividend by 13 per cent and pay a special dividend. As a simple, low risk, UK focused bank we are committed and well positioned to help Britain prosper and become the best bank for customers and shareholders.”