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Barclays adds £300m to PPI compensation pot

Barclays has made a further £300m provision for PPI redress after experiencing an increase in claim volumes.

The bank made £1bn available to cover the potential cost of PPI-related compensation in May 2011.

The bank’s first-quarter statement says: “Barclays observed a recent increase in PPI claim volumes. Redress payments are now expected to exceed original expectations and a further £300m has been provided as at March 31.”

The statement shows between January 1 and March 31, the group made a profit of £2.4bn, up by 20 per cent on the £2bn made in the first three months of last year.

Its UK retail arm made a profit of £334m in the first three months of 2012, up by 15.9 per cent on the £288m profit last year.

Gross mortgage lending totalled £5.1bn in the first quarter, the same as in 2011.

Barclays says it reduced its sovereign exposure to Spain, Italy, Portugal, Ireland and Greece by 16 per cent in the first quarter from £7.1bn to £6bn.

Highclere Financial Services partner Alan Lakey says: “I would not be surprised if Barclays’ PPI redress figure rises again. It is easier for banks to pay the claims without contesting, considering the volume they are receiving.”

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