The UK’s largest retail bank, Lloyds, has posted a statutory pre-tax profit for fiscal 2017 of £5.3bn, up 24% year-on-year.

A further provision for PPI mis-sellling of £600m taking PPI provisions to date to £18bn resulted in Lloyds missing analyst forecasts.

Underlying profit rose 8% year-on-year to £8.5bn.

At the same time, Lloyds released details of its third strategic review to cover the period to 2020.

Review highlights include:

  • Investment of more than £3bn in strategic digital initiatives, an increase of more than 40% on its previous strategy;
  • operating costs <£8bn in 2020 with a cost: income ratio in the low 40s; Lloyds ended 2017 with a cost income ratio of 46.8%, down 190 basis points on 2016;
  • A 14–15% return on tangible equity from 2019;

António Horta-Osório, Lloyds group CEO said: “We will deploy new technology to drive additional operational efficiencies that will make banking simple and easier for customers whilst reducing operating costs, pursuing the following initiatives:  deeper end-to-end transformation targeting over 70% of cost base;  simplification and progressive modernisation of our data and IT infrastructure; and  technology enabled productivity improvements across the business.”

Horta-Osório said that Lloyds would refocus its branch network ; he gave no guidance on numbers but said that Lloyds wants to retain its position as the largest bank by branches.

Lloyds will make its biggest ever investment in people, increasing colleague training and development by 50% to 4.4 million hours per annum by 2020.

Other strategic targets include an increase in net lending to SMEs by more than £6bn.

Lloyds will raise its dividend by 20%to 3.05p per share and will buyback shares of up to £1bn.

Horta-Osório added that Lloyds net promoter score had increased from 43% to 62% since 2011.

On digital, Lloyds now has 13 million digitally active customers with 209 million digital visits per month; 68% of customer needs are now met digitally up from 54% at the end of 2015.

72% of customers used two or more channels in 2017 with Lloyds branches receiving 8 million branch visits per month in 2017.

Horta-Osório could not resist a little dig at his competitors saying that he was proud of the fact that Lloyds was the only major bank to meet the open banking deadline on time.

He also flagged up that 34% of senior roles at Lloyds are held by women up from 29% in 2014.