Lloyds Banking Group has taken a £1.6 billion hit to cover ballooning compensation costs linked to the mis-selling of payment protection insurance (PPI) and to resolve its mistreatment of mortgage customers.
Its PPI costs for the six months to June 30 swelled to £1.05 billion, having earmarked £350 million for claims in the first quarter, and provisioned for another £700 million in the second quarter.
The bank said it will help cover a jump in PPI claims from around 7,700 per week to 9,000 through to the claim deadline set for the end of August 2019, but brings its total bill for PPI misselling to over £18 billion.
Lloyds has now increased its provisions pot approximately 17 times.
Chief financial officer George Culmer said it was “disappointing to be having to do it again” but did not take a further rise off the table.
“It will depend upon where those future volumes (of complaints) go,” he said.
The bank has also agreed to compensate approximately 590,000 mistreated mortgage customers, some of which were mistakenly charged unaffordable fees after falling behind on payments between 2009 and 2016.
The Financial Conduct Authority said Lloyds expects to shell out £283 million as part of the redress scheme, prompting the bank to set aside a further £155 million in the half year to June 30.
Arrears repayment costs were bundled into a £540 million provision meant to cover additional conduct issues including alleged mis-selling of packaged bank accounts.
The provisions were detailed in its half-year earnings, which showed a 4% rise in statutory pre-tax profits to £2.54 billion, while total income rose 4% to £9.27 billion in the six months to June 30.