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.

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“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.”