By Iain Withers and Lawrence White
LONDON (Reuters) - Britain's biggest domestic lender Lloyds Banking Group <LLOY.L> reported a 27% drop in annual profit in 2019, as it paid out billions of pounds to customers mis-sold insurance products and saw bad loans rise.
Lloyds reported a pre-tax profit of 4.4 billion pounds ($5.7 billion), in line with analysts' expectations as nearly 2.5 billion pounds of provisions for compensating customers mis-sold payment protection insurance weighed.
Lloyds announced a dividend of 3.37 pence per share, but no buyback as some investors had hoped for.
The payout means a 2.4 billion pound windfall for shareholders, well down on the 4 billion pound bonanza announced the previous year. The bank cancelled a planned 650 million pound planned buyback once the full costs of PPI became clear.
Lloyds is seen as a bellwether for the British economy as the country's largest provider of home loans and one of its biggest backers of businesses.
Lloyds CEO Antonio Horta-Osorio said the economy remained "resilient" and that while uncertainty over Britain's future trading relationships triggered by Brexit remained, the country had "a clear sense of direction" after December's election.
Despite the positve outlook, impairments on bad loans spiked to 1.3 billion pounds in 2019, up from 937 million pounds the previous year.
Lloyds blamed that on weakening used car prices hitting its motor finance business, and two large company failures.
(Reporting by Iain Withers and Lawrence White, editing by Sinead Cruise)