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Lloyds reports £3.4bn loss after making PPI provision

Lloyds Banking Group has announced a loss for the first quarter of 2011 largely because it put £3.2bn aside to cover payment protection insurance misselling claims.

In April, the UK banks, led by the British Bankers’ Association lost a judicial review over PPI and may now have to pay out large amounts in compensation.

Following the £3.2bn provision for redress, Lloyds has decided to withdraw from the BBA’s judicial review. The BBA has until May 10 to lodge an appeal.

In the bank’s interim management statement, released today, Lloyds reported a loss of £3.47bn for the first three months of year compared to a profit of £721m in the same period last year.

In the previous quarter it posted a loss of £1.6bn.

The Bank cut its loan to deposit ratio from 154 per cent in the last quarter of 2010 to 148 per cent in this quarter as customer deposits increased from £393bn to £398bn and loans fell from £592bn to £585bn.

The Banks also says it is ahead of international requirements for capital reserves by holding of 10 per cent core tier 1 capital compare to the 7 per cent required under the Basel accord.

Losses from bad loans rose to £2.6bn in the first quarter up from £2.4bn a year ago but down from £3.8bn in the previous quarter.

The statement says this is £500m more than was expected, mainly due to £1.1bn loss on Irish loans.

At 11.30am, Lloyds share price has fallen by 8.9 per cent to 52.85p from its opening price.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. If anyone is interested in a possible major problem with mortgages please don’t hesitate to ask.

  2. How can this not be front page news for every tabloid? A high street bank has mis-sold to the tune of £3.2 billion taking advantage of the lack of knowledge or expertise of the general public!

    What amazes me is that the FSA still chases the small to medium sized firm when what it should be doing is taking a closer look at the high street mass market banks and the poor practices they operate, often on a non advised basis.

  3. Hey Evan, what’s the issue with mortgages?

  4. anthony brennan 5th May 2011 at 12:22 pm

    This is a smart move by the new chief executive. It ensures his future performance is not marred by old claims. However although the bank has provided for the refund the money still needs to be claimed by the customer.

    The money will not simply be repaid. The customer must first establish a basis of claim for the recovery of the money. This will still require some knowledge of contract law (ie basis of rescission) and of insurance law (Uberrima fides) to reclaim the money.

    http://www.blog.bank-charges-recovery.co.uk/

  5. A major blow for Direct Advice by Banks as they simply got it wrong. The joys of direct advice etc!!!

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