The group, which includes Bank of Scotland and Scottish Widows, suffered a £2.5 billion bill related to PPI pay-outs last year.

Group chief executive António Horta-Osório said: “In 2019 the Group has continued to make significant strategic progress while delivering solid financial results in a challenging external market.

“The Group’s statutory performance was impacted by a substantial PPI charge related to the deadline for claims submission. Underlying performance was resilient, reflecting the health of our customer franchise and the strength of the business model.”

He added: “Given our clear UK focus, our performance is inextricably linked to the health of the UK economy.

“Throughout 2019, UK economic performance has remained resilient in the face of significant political and economic uncertainty, supported by record employment, low interest rates and rising real wages.

“Although uncertainty remains given the ongoing negotiation of international trade agreements, there is now a clearer sense of direction and some signs of an improving outlook. We remain well placed to Help Britain Prosper, support our customers and deliver strong and sustainable returns for shareholders.”

Commenting on the results, John Moore, senior investment manager at Brewin Dolphin, said: “Lloyds’ performance is typically a reflection of the wider UK economic situation. Political uncertainty influenced business and consumer confidence last year; yet, despite this challenge, the bank has posted resilient results.

“PPI charges have once again reared their head, but the underlying business appears to be in a decent place: importantly in such a difficult environment, Lloyds has continued to deliver a reduction in costs and, as a result, its net interest margin is stable. A slight increase to the dividend also suggests management is relatively confident for the future.

“With some Brexit clarity, green shoots of growth in the UK economy, and further cost-cutting, things may start to look up for Lloyds after a difficult time.”