Lloyds Banking Group sets aside further £100m for PPI
Lloyds Banking Group has set aside a further £100m to cover payment protection insurance (PPI) mis-selling as it reported flat quarterly profits.
Pre-tax profits for the first three months of the year were £1.6bn, unchanged from the same period a year earlier. The bank also warned that continuing Brexit uncertainty could have a further impact on the UK economy.
However, Lloyds said it had not seen the quality of its assets deteriorate.
The group’s chief executive, António Horta-Osório, said: “While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model, and in particular our market leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders.”
The Lloyds results follow first quarter reports from Royal Bank of Scotland and Barclays, who both blamed falling margins on intensifying competition in the mortgage market and slowing business investment due to Brexit uncertainty.
A deadline of 29 August 2019 has been set by the UK’s financial regulator for the final PPI mis-selling claims to be made.
More than £30bn has already been paid out in compensation across the industry as a whole, and major banks have set aside billions more for future claims.
In 2018, Lloyds set aside £750m for PPI claims. The latest £100m charge takes Lloyds’ total provision to £19.525bn.
As many as 64 million PPI policies were sold in the UK from as long ago as the 1970s. They were designed to cover loan repayments if borrowers fell ill or lost their job.
Not all of them were mis-sold, but sales were pushed on a huge scale to people who did not want or need them, or who could not use them.
Lloyds also booked charges of £126m for restructuring, and another £339m which included an estimated charge for the exit fee for ending its mammoth contract with asset manager Standard Life Aberdeen (SLA).
The bank declined to specify the exact charge set aside for the SLA contract break fee.
It comes after a tribunal recently ruled Lloyds did not have the right to end the hefty £100bn contract with SLA.