Lloyds Banking Group has set aside an additional £1.4bn to pay claims for missold payment protection insurance, taking its total PPI provision to £13.4bn.
In the bank’s results for the first half of the year, published today, Lloyds says it is continuing to see complaints driven by claims management firms, and is paying out higher than expected average compensation.
The bank was fined a record £117m by the FCA last month for failing to properly handle PPI complaints.
Lloyds has posted a pre-tax profit of £1.2bn for the first six months of the year, up 38 per cent from £863m at the same time last year.
This is despite the extra £1.4bn carved out for PPI redress and an extra £660m charge following the £1.7bn sale of TSB to Spanish bank Banco Sabadell in March.
Separately, Lloyds has also incurred a £435m charge across its retail, commercial banking and consumer finance arms.
Of the total, the bank says £318m was related to potential claims and redress for products sold through the branch network, reviews into legacy product sales and incentive schemes.
Some £175m has been set aside to pay out on claims related to packaged bank accounts.
Lloyds chief executive Antonio Horta-Osorio says: “The additional provision for PPI is disappointing and mostly reflects higher than expected reactive complaints with higher associated redress.”
He adds: “The continued improvement in financial performance and strong start to the next phase of our strategic journey in the first six months of the year position us well for the future, despite the uncertainties around the economic, regulatory, competitive and political environment.
“We believe we are well placed to become the best bank for our customers while
delivering strong and sustainable returns for our shareholders and supporting the UK economic recovery.”