Matt Scuffham and Steve Slater London

State-backed Lloyds Banking Group was ready to return to private ownership after reporting a pretax profit for the first time in three years, the British lender said yesterday.

Lloyds chief executive Antonio Horta-Osorio has turned around the bank’s fortunes since taking the helm in March 2011, slimming it down to focus on lending to UK households and businesses and meet tougher regulatory requirements on capital.

But the bank risked a political backlash by saying it paid out £395 million (R7.2 billion) in bonuses last year, up 8 percent year on year, including a £1.7m award to Horta-Osorio. His bonus will be paid in stock and is deferred for five years.

Rival Barclays has angered politicians and unions by raising bonuses for its investment bankers by 13 percent.

Lloyds, 33 percent owned by the UK government, said it made a pretax profit of £415m last year, up from a loss of £606m in 2012, and increased lending in Britain by 3 percent.

Horta-Osorio said the bank was now ready to return to full private ownership whenever Britain’s finance ministry and UK Financial Investments, which manages the government’s shares, decided it was right to do so. “We absolutely consider ourselves back to normal,” he said.

Lloyds needed a £20bn bailout during the financial crisis, which left taxpayers with a 39 percent stake.

Shares in Lloyds, which have more than doubled over the past two years, were down 3 percent in early trade as analysts anticipated a possible stock overhang as the government share sale approaches.

The bank took £3.5bn more in provisions last year to compensate customers for past mis-selling of products, but said its core capital ratio increased to 10.3 percent. – Reuters