Financial News

  • 1 August 2014, 12:17

Lloyds Banking Group Takes New 600m PPI Hit

Lloyds Banking Group has revealed it has set aside another 600m provision for mis-selling of payment protection insurance (PPI).

The announcement comes as it released its half-year results, which showed an underlying profit rise of 32% to 3.8bn.

The bank, which is 25% owned by the UK taxpayer, said it had "substantially improved" its performance in the six months to the end of June.

Lloyds has now set aside 10.4bn for PPI mis-selling, with an estimated 2bn of the figure for administrative costs.

The bank now expects expects a slowdown in complaints in the future.

Chief executive Antonio Horta-Osorio said: "We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity.

"By investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency."

The improving profit situation for the bank has strengthened its case to restart dividend payments for the first time in six years, following a 20.5bn taxpayer bailout.

Lloyds said it would ask regulators to begin "modest" dividends in the second half of the financial year.

On Monday, Lloyds was fined 218m by UK and US regulators over Libor manipulation and other rate-rigging incidents.

It also paid the Bank of England (BoE) more than 7m compensation over payments under the now-defunct special liquidity scheme.

It was revealed BoE governor Mark Carney had sent a letter to the Lloyds chairman, describing the action of some bank staff as being "highly reprehensible".

Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said the bank's previously lax operating culture was to blame.

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