The bailed-out bank will pay a special dividend of 0.5p a share, in addition to its first ever final dividend of 1.5p, taking the total payout to shareholders last year to £2bn, reports The Telegraph.
It marks the latest sign of a recovery, after the group resumed shareholder dividends last year for the first time since it was rescued by the taxpayer in 2008.
Lloyds also confirmed it was sharing out a £353.7m bonus pot among staff, working out at £4,600 per employee on average, although cash bonuses are capped at £2,000.
Chief executive Antonio Horta-Osorio is also benefiting with a total pay package worth £8.5m for the year.
However, Mr Horta-Osorio will only receive his annual shares bonus if the Government sells off its remaining 9pc stake in the bank or the shares remain above the taxpayer break-even price of 73.6p for 126 consecutive trading days. The shares are currently trading hands at 69p.
It came as Lloyds reported that profits fell 11pc to £1.6bn in 2015, as the lender continued to count the cost of the payment protection insurance mis-selling scandal.
An extra £2.1bn provision to cover expected payment protection insurance (PPI) compensation claims hit the bank hard in the final quarter of the year. Over the whole year, the bank raised its PPI provisions by £4bn.
The extra cost brings the total PPI bill for Lloyds to £16bn, the largest of all the major UK banks.
Excluding costs such as PPI, the bank made an underlying profit of £8.1bn, up 5pc on the previous year.
Lloyds’ capital ratio, which is a measure of the bank’s capital and underlying strength, also improved, rising to 13pc from 12.8pc at the end of 2014.
Officials at the Bank of England last year confirmed that Lloyds’ buffer is now deemed to be sufficiently large to allow the lender to pay a dividend.
Mr Horta-Osorio said the bank wants to pay out dividends amounting to more than 50pc of profits in future years.
He was also bullish on Britain’s economic outlook, saying he expected the UK economy would continue to grow strongly.
“This economic recovery is being achieved with lower levels of debt. This is the most important thing. It is not happening in many other countries in the world,” said Mr Horta-Osorio.
“The UK is able to grow at one of the fastest rates of developed economies, but with lower debt in households which have been able to save more and at the same time consume more, given the decrease of the level of interest rates.”
Corporate debt has also come down, while the public debt in relation to GDP is also falling, he said.
“In my opinion that will ensure the economic cycle, pending any external shock, will be a longer one,” he added.
Lloyds was bailed out in the financial crisis, but the Government has sold most of its stake in the bank, leaving the taxpayer with around 9pc of the shares.
Lloyds said this means taxpayers have so far recouped £16bn from the bank.
However, the Government recently delayed the final tranche of the share sale, including an offer of discounted shares to retail investors, because of volatility in the stock market and a fall in Lloyds’ share price.
Lloyds’ finance director, George Culmer, said the bank’s shares had performed well compared with others in the sector.
“We’re not immune – the market is down and the banking sector is down. But in terms of year-to-date performance we have outperformed the vast majority of our peers, and I like to think that is a reflection on the clarity of our strategy and our ability to deliver,” said Mr Culmer.
One risk currently spooking markets is the uncertainty around the forthcoming referendum on Britain’s membership of the EU.
Lloyds has not yet taken a formal view, but Mr Horta-Osorio said this morning that he believed the economy would remain strong regardless of the outcome of the vote.
“We have the advantage of a simple, low cost-to-income model, it is a very robust model which will thrive in any condition,” he added.
“That outcome will have a significant impact on Lloyds given we have completely tied our future to the future of the UK economy.”
One way for the bank to keep those costs down is to close more branches.
The bank said it has more customers online than ever before with a record “55pc of customer needs being met digitally”, continuing the shift away from physical high street branches towards the website and mobile apps.
“Customers want a multi-channel approach, they want to interact on mobile, telephone, branch, wherever they are and at any time. That is what we are developing, following customers’ needs,” said Mr Horta-Osorio.
“As a consequence of that, for the first time in five years we decided to close a few branches where transactions and the number of customers is quite small, but we are increasing our market share of branches, but we have to follow customer trends to have a bank that is efficient for the majority of our customers.”
Lloyds is part-way through a plan to close 150 branches over three years and analysts expect it to cut several hundred more in the coming years.