Lloyds Banking Group says it is setting aside an extra £1.8bn to cover its PPI liabilities as it reveals it hopes to start paying a dividend again later this year.
In a statement to the stockmarket this morning, ahead of its results next Thursday, the bank says its projected complaint volumes will not fall away as quickly as previously anticipated, triggering the new provision.
Total costs for PPI in the three months to 31 December were £687m. The new £1.8bn set-aside takes the bank’s total PPI cost provision to almost £10bn. As at 31 December, £2.8bn of the total provision remained unused. Lloyds has also set aside £130m to cover claims relating in interest rate swap misselling to SMEs.
It says underlying profits for 2013 stand at £6.2bn compared to £2.6bn the previous year.
The bank has also revealed it may begin paying dividends again in the second half of 2014, the first time it would have done so since it came under Government ownership. It says the Prudential Regulatory Authority is considering whether to allow the group to pay dividends following the strengthening of its capital position.
The statement confirms LBG has begun work around the sale of the Government’s 33 per cent stake in the bank.
Group chief executive Antonio Horta-Osorio says: “Over the last three years we have reshaped, simplified and strengthened the business to create a low-risk efficient Retail and Commercial bank that is focused on our customers and on helping Britain prosper.
“Our significant progress in delivering sustainable improvements in our capital position and our profitability, despite legacy issues, is testament to the strength of our business model and the commitment of our people, and has enabled the UK government to start to return the bank to full private ownership.”