Lloyds Banking Group has taken a fresh £1.6bn hit in the first six months of the year to cope with a new wave of claims from consumers missold payment protection insurance and to rectify treatment of mistreated mortgage customers.
The figure includes an additional £1bn charge for PPI – a scandal that has now cost the bank £18.1bn since it first started taking provisions in 2011.
António Horta-Osório, the bank’s chief executive, acknowledged that the costs marred what he described as “an important day for Lloyds” as it is the first set of results since the government sold off all its shares after the 2008 bailout.
As the bank reported a 4% rise in first half profits to £2.5bn, Horta-Osório also said the bank would always incur costs for redress to customers as a cost of doing business.
In addition to the £1bn PPI charge, the bank set aside another £540m in the first half. This includes a previously announced £100m for compensating customers hit by the HBOS Reading fraud for which two former employees were jailed in February and other issues, including the misselling of packaged bank accounts – where insurance and other products are bundled into current accounts – and compensating customers whose mortgage arrears were mishandled.