SHARES in part-nationalised Lloyds Banking Group soared 2.7% amid reports that it was aiming to pay-out 70% of profits as dividends and heavyweight investment bank UBS raised its target price on the stock to 100p.
Antonio Horta-Osorio, chief executive of the owner of Bank of Scotland, has said he wants Lloyds to be a high dividend payer.
Shareholders have not received a pay-out since the merger of Lloyds TSB and Halifax Bank of Scotland in 2008 to form Lloyds.
But the 39% state-owned bank's return to profit in the first half of 2013 led the bank to approach regulators about restarting payments.
Lloyds is reported to have told potential investors it expects to pay out up to 70% of its earnings in dividends by 2015. This would be much higher than its peers.
A Lloyds spokesman declined to comment.
But it sparked a 1.96p rise in its share price to 75.69p.
This takes it further above the 73.6p break-even level for the taxpayer's stake.
UBS analyst John-Paul Crutchley yesterday raised his target price on Lloyds from 72p to 100p.
"Lloyds is returning to the business model of 1996-1999 which we have been anticipating for some time," he wrote in a note for clients, highlighting its falling costs and bad debt provisions that were below City expectations.
Mr Crutchley said he expected Lloyds to buy back some of the Government's stake itself after anticipated sales to institutional and retail investors.
It was also reported yesterday that the Government is considering a £1.5 billion injection into Edinburgh-based Royal Bank of Scotland if it goes ahead with a proposal to split the 81% state-owned institution into a good bank and a bad bank.
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