Lloyds Takes £439m Hit For First Half Of 2012

Lloyds Banking Group has announced a statutory pre tax loss of £439m for first half of 2012.

The bank has also said it has put aside a £700m provision in the second quarter for payment protection insurance (PPI) mis-selling.

Lloyds had previously set aside £3.6bn to cover PPI compensation after a sharp rise in claims in recent months, with banks saying the spike in claims is fuelled by aggressive marketing by claims-management companies.

It is the second time this year that Lloyds, Britain's largest retail banking group, has increased the provision over PPI, which has blighted the banking sector.

"These half-year results show a continuation of what we delivered in the first quarter - significant balance sheet reshaping and another resilient performance against a backdrop of economic challenges and a lack of public confidence in our industry," bank boss Antonio Horta-Osorio said.

"We are on track to deliver our strategic aims and we are making significant progress with our financial targets.

"We are building a stronger and safer group - one with a more robust balance sheet, lower exposure to risk and with lower operating costs. This is enabling us to increase our support to UK households, businesses and communities."

In early Thursday trading shares in Lloyds dipped slightly before recovering into positive territory.

Mr Horta-Osorio said his bank has undertaken a "thorough" internal investigation into the inter-bank Libor scandal, which also threatens to engulf the banking sector.

In early July, Lloyds announced a decision to sell more than 630 branches to the Co-operative Bank, as part of a divestment deal with financial regulators.

Meanwhile, police were called to calm crowds that gathered after a Lloyds TSB cash machine started dispensing "free money" in Ipswich.

The cash machine began issuing twice the requested amount at about 8pm on Wednesday.

Arguments broke out among those trying to use the faulty machine and police were called to keep watch until staff could put the problem right.

It is thought about 30 people benefited from the fault - and it is unlikely the bank will be able to trace them to reclaim the money.