Lloyds Banking Group set aside another £750million yesterday to compensate customers who were mis-sold loan insurance, bringing its total bill up over £8billion.
The surprise provision overshadowed an almost doubling of its third-quarter underlying profit, although the extra charges put the bank’s quarterly results into the red.
According to its statement to the Stock Exchange yesterday, the bank was still receiving on average 11,000 complaints a week from people claiming they were mis-sold payment protection insurance (PPI) in the third quarter.
This was down from 12,500 complaints a week in the previous quarter but more than Lloyds had predicted.
The bank, which is 33% owned by the government, has now set aside more PPI provision than any other UK bank.
Nic Clarke, an analyst with broker Charles Stanley, said he was “disappointed that PPI has once again performed worse than expected and required another substantial provision”.
But he added the bank had enjoyed “robust performance” in the nine months of 2013.
In its third-quarter update, Lloyds reported an underlying profit, not including the PPI charge, of £1.5billion, up 83% on the same period the year before, reflecting an improved interest margin and lower costs, and in line with analysts’ forecasts.
But the PPI provisions left Lloyds with a loss of £440million for the three months to the end of September.
Overall, the banking group has made profits of £1.7billion in the last nine months, compared to £1.9billion in the same period last year.
Lloyds, now Europe’s fourth-biggest bank, is in talks with Britain’s financial regulator about the possibility of restarting dividend payments next year and will set out its dividend policy alongside its 2013 results in February.
Chief executive Antonio Horta-Osorio said: “The bank is back to profitability. We are back to being a normal company so therefore we have started, in this quarter, discussions with our regulator.
“We are going to be a high-dividend-paying stock in the future.”
The government began offloading its shares in Lloyds through the sale of a 6% stake in September and Mr Horta-Osorio said he expected a further sale next year.
“I think it is very likely that there will be a significant other tranche (sold) in 2014,” he added.