Lloyds Banking Group is paying its first dividend for six years after reporting a rise in profit and improvement in its capital strength, which has allowed the UK government to cut its stake in the lender.
The bank, which is now 24%-owned by the government, said it would pay a dividend of 0.75 pence for the 2014 financial year.
Lloyds said it intends to pay out at least 50% of its sustainable earnings in the medium-term.
It reported an underlying profit of £7.8 billion, up from £6.2 billion the year before and ahead of the market expectations for a profit of £7.5 billion pounds, based on the average forecast from 17 analysts polled by Reuters.
"While we recognise we have more to do, we enter the next phase of our strategy from a position of strength," chief executive Antonio Horta-Osorio said.
Lloyds said it paid staff £370m in bonuses for 2014, down 4% from 2013 on an underlying basis.
Horta-Osorio said he will take shares worth about £7m awarded under a plan set out in 2012, but he would not sell the shares until the government's stake was significantly sold down.
The bank said its net interest margin, a key driver of profits, is expected to be around 2.55% this year, up from 2.45% in 2014.
