More compensation for customers
Another £500m PPI hit as Lloyds’ clean up continues
Lloyds Banking Group has taken a further £500 million hit to compensate customers mis-sold payment protection insurance and a lower underlying profit for the last quarter of £1.97 billion against £2.16bn a year ago.
Its total bill for PPI has now risen to £13.9bn, more than twice the sum set aside by any of the other banks.
The profits were below expectations that it would at least equal last year’s profits figure. The statutory pretax profit, including one-off items, was £958m against £751m in 2014. Over nine months, underlying profit rose from £5.97m to £6.36m.
Chief executive Antonio Horta-Osorio said the nine month figure was largely driven by a significant reduction in impairment charges and lower costs, and led to an improvement in the underlying return on required equity to 15.7%.
“Underlying profit was, however, lower in the third quarter than last year, reflecting lower than expected other income, partly offset by improvements in impairments and costs,” he said.
“While other income is expected to recover in the fourth quarter, we now expect it to be slightly below 2014 for the full year. The year-to-date statutory profit before tax of £2,151 million was up significantly, despite the impact of TSB taken in the first quarter and conduct charges, including an additional charge in the third quarter for PPI.
“Notwithstanding these additional charges, our capital position also continues to improve, with our common equity tier 1 ratio now standing at 13.7 per cent compared with 12.8 per cent at the end of 2014.”