StockMarketWire.com - Supermarket giant Tesco posted a 29% rise in first-half profit and hiked its dividend as households stocked up on groceries during the pandemic.

Pre-tax profit for the six months through June increased to £551m, up from £428m year-on-year, as revenue edged up 0.7% to £28.7 billion.

Tesco declared an interim dividend of 3.2p per share, up 21% year-on-year.

UK and Ireland supermarket sales climbed 8.6% to £24.3 billion, helping to offset a 31% drop in sales at the company's banking division to £0.4 billion.

Tesco said it had incurred £533 million in costs related to its response to the Covid-19 crisis.

Its operating profit before one-items fell 16% to £1.04 billion after 4.4% rise at the retail division was offset by a £155 million loss in the banking division.

'The first half of this year has tested our business in ways we had never imagined, and our colleagues have risen brilliantly to every challenge, acting in the best interests of our customers and local communities throughout,' chief executive Ken Murphy said.

On its outlook, Tesco said it expected a 'broadly even balance' between the first and second halves of the year in terms of retail profitability.

Retail operating profit for the full year was not expected to be at least the same level as the 2020 financial year on a continuing operations basis.

The bank, however, was still expected to post a loss of between £175 million and £200 million.

'We will review any changes made to macro-economic forecasts and this could result in releases from or further additions to the bad debt provision,' Tesco said.

'Whilst headline profitability is impacted in the short term, the bank's capital ratios and liquidity remain strong.'

Separately, Tesco announced that it had appointed Imran Nawaz as its new chief financial officer, effective April.

Nawaz was currently CFO of ingredients company Tate & Lyle. Story provided by StockMarketWire.com