The UK government will make at least a £500m profit from its bailout of Lloyds Banking Group, its chief executive Antonio Horta-Osorio said, as the lender nears a return to private hands.
The UK government's stake in Lloyds is down to just 0.25%, Chairman Norman Blackwell earlier told shareholders at the lender's annual meeting in Edinburgh.
This puts the bank on track to be in full private ownership within days.
"We take great pride in the fact that the government has already received more than its original investment of £20.3 billion," Horta-Osorio said.
The estimated £500m profit is higher than the £100m the bank forecast in March, and contrasts sharply with a similar bailout of Royal Bank of Scotland which is projected to make a loss.
Lloyds shares have fallen by 6% since the bank's bailout in October 2008.
The UK government will make a profit, however, thanks to dividends paid by the bank, the fact that most of the shares were sold for more than the government paid, and a £2.5 billion fee Lloyds paid to avoid entering the Asset Protection Scheme that insured bailed-out banks' riskiest loans.
UK Financial Investments Limited (UKFI), which manages the government's stake, resumed Lloyds' share sales in October, having halted them for almost a year due to market turbulence.
The UK spent more than £20.3 billion rescuing Lloyds during the global financial crisis of 2007-9, leaving the government with a 43% shareholding, which has gradually been sold back into the market over the last five years.
"Looking at the group now it is perhaps easy to lose sight of the fact that just six years ago this was a bank in crisis," Horta-Osorio said.
While Lloyds is largely free of the financial damage to its balance sheet sustained during the crisis era, shareholders today reminded the bank's management of the reputational damage it still faces.
Blackwell and Horta-Osorio faced a string of questions about the lender's handling of a fraud at the Reading branch of its HBOS unit for which six people were jailed this year.
One shareholder said that Blackwell should resign over the case, for which Lloyds has apologised and set up a £100m compensation scheme.
Blackwell said the £100m figure does not represent a cap on payouts.
"The total amount paid will be whatever is required to ensure everyone gets fair compensation," he said.
