Lloyds raises PPI provision by another £1.0 billion
01 November 2012
UK's state bailed out Lloyds Bank earmarked another £1.0 billion ($1.6 billion, 1.2 billion euros) today to compensate clients who were mis-sold payment protection insurance (PPI), with the move landing the lender into another third-quarter loss.
Lloyds Banking Group, owned 39.6-per cent by the taxpayer following a huge bailout at the height of the global financial crisis, said that the new provision would take its total bill for the insurance mis-selling scandal to £5.3 billion.
In a results statement prepared by the bank, it said, it faced a net loss of £361 million in the three months to the end of September, which however, marked an improvement from a shortfall of £501 million a year earlier.
According to chief executive Antonio Horta-Osorio, the PPI charges were the "primary driver behind the statutory loss." From the £5.3 billion that it had set aside, the bank added that it had paid out £3.7 billion at the end of September.
However, without the PPI provision, the group doubled its underlying profit to a better-than-expected £840 million in the third quarter, as it pared bad debts and cut losses from its non-core businesses.
Horta-Osorio added, the bank had made further significant progress this quarter, improving underlying performance in a challenging environment, while continuing to deliver returns above the cost of equity in the core business and strengthen its already robust balance sheet.