Lloyds PPI bill
Lloyds Banking Group’s bill for mis-selling Payment Protection Insurance (PPI) has moved above the £10bn mark.
The taxpayer-backed lender made an extra £600m worth of provisions in the first half of 2014, taking the total amount the bank has set aside or paid to £10.4bn.
The bank said the rate of complaints related to PPI had been lower than anticipated, with the increased provisions estimating a further 155,000 complaints.
It came as the bank announced a 32pc increase in underlying profits in the period to £3.8bn and said it would ask the Bank of England for permission to begin paying dividends in the second half of the year, a development expected to ease the sale of the Government’s 25pc stake following its 2008 bail-out.
Lloyds put the strong trading performance down to an improving UK economy that meant charges on bad loans declined by 58pc compared to last year.
However, the PPI charge and other issues including a £218m fine from US and UK authorities over rigging interest rates, as well as restructuring costs related to the EU-mandated sell-off of TSB, meant the bank’s pre-tax profits fell from £2.1bn to £863m.
On Thursday, Lloyds chief executive Antonio Horta-Osorio apologised for the bank’s role in the Libor scandal and the rigging of the Repo Rate benchmark – aligned to the emergency fund used to support UK banks during the crisis.
Mr Horta-Osorio said the actions were “totally unacceptable and condemn them without reservation”.
Lloyds said it expected pre-tax profits in the second half of the year to be “significantly ahead” of the first-half figure.
“We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity, by investing in the products and services our customers need and further strengthening and de-risking our balance sheet,” said Mr Horta-Osorio.