INVESTORS in Lloyds Banking Group can look forward to as much as 8p a share in dividends and buy-backs, according to Steve Davies, fund manager at Jupiter Asset Management.

Mr Davies, co-manager of the Jupiter UK Growth Fund and manager of the Jupiter Undervalued Assets Fund, believes Lloyds, owner of Bank of Scotland, could end up returning more money to shareholders than previously thought, in part due to a raft of cost-cutting.

Mr Davies previously tipped Lloyds to deliver income of 5p to 6p a share on a share price of around 100p.

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Now he expects it will be able to generate excess capital of around £6 billion a year. He said: "For a Lloyds shareholder, it suggests the bank could be in position to distribute as much as 8 pence a share in dividends and share buybacks in years to come.

"Given this, a share price of 140-150 pence looks plausible for the patient, long-term investor."

Lloyds has promised it will pay out at least half of profits in dividends over the medium term.

However, chief executive Antonio Horta-Osorio cautioned that payouts will be limited if a strong economy recovery requires it to finance more loan growth.

It hasn't paid a dividend since 2008. Lloyds's shares closed up xxp or xx% at xxp.

Jupiter owns 0.25% of Lloyds.