Lloyds PPI payout bill tops 8 Billion pounds

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Lloyds Banking Group’s bill for compensating customers who were mis-sold payment protection insurance (PPI) has risen to more than £8 billion.

Lloyds, which is 33% owned by the taxpayer, increased PPI provisions by £750 million as it notched up statutory pre-tax losses of £440 million for the third quarter.

It shows how the impact of the scandal, which has affected a number of banks, continues to grow more than two years after Lloyds announced it was setting aside £3.2 billion to deal with claims.

The latest charge, together with other costs from the legacy of its troubled past, masked an improved day-to-day performance as underlying profits nearly doubled to £1.52 billion – adding to pressure on the Government to dispose of its remaining stake.

A 6% chunk was sold to institutional investors for £3.2 billion last month

Lloyds also said it was in talks with regulators about re-starting dividend payments for the first time since 2008.

Following its rescue by the taxpayer after swallowing up troubled Halifax Bank of Scotland during the financial crisis, the group’s drive to return to profit has been increasingly hampered by the costs of PPI.

Lloyds has already spent £6.3 billion on the compensation programme. Of the £8 billion in total now set aside, £1.7 billion is earmarked for administration costs alone.

In the third quarter, a higher-than-expected £706 million was spent, including £161 million for administration. The average rate of upheld complaints has been rising since the start of the year, the bank said.

The overall volume of complaints has been falling, but more slowly than expected. Weekly complaints were running at 11,000, down from 12,500 in the second quarter.

Lloyds had swung out of the red earlier this year with half-year profits of £2.1 billion.

Since then it has spun off more than 600 branches under the revived TSB brand, which it hopes to float next year. But the costs of the move were among the hits to the balance sheet in the latest results.

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