In fact, at a time of national crisis and hardship, the sight of big banks lavishing huge dividends on City investors would have been a grim one. The divi caps may not have been financially necessary, but they saved the sector from yet another PR disaster.
But that’s all in the past. Having survived the real-world stress test of a global pandemic, now they can release the wall of money they’ve built up over the past 18 months. Not only that, but they can shout about it in their forthcoming half-year profit reports, alerting potential new shareholders of their appeal.
The question is, will it impact on the share prices? Absolutely it should, particularly at Lloyds, which has the biggest pile of surplus capital.
Lloyds isn’t just a dividend play, though. While there’s always the uncertainty of a new chief executive to consider (HSBC’s Charlie Nunn arrives in August), there are other reasons to be hopeful. Its huge market share crimps the potential to expand in mortgages, but by the looks of consumer spending, there could be plenty of growth to come from unsecured lending by the end of the year.
With its newly cost-efficient set-up, that could herald an era of profit growth not reflected in its share price even after its 47% leap so far this year. Buy.