Payment protection claims send Lloyds' profits tumbling
Taxpayer-backed Lloyds Banking Group revealed lower-than-expected profits after it took an additional £375m hit to cover payment protection insurance (PPI) claims.
The 40% state-owned bank has now set aside nearly £3.6bn to deal with PPI compensation after a recent increase in the volume of claims.
Lloyds, which warned that the final cost of the PPI mis-selling scandal may change, revealed pre-tax profits of £288m for the three months to March 31, compared with £316m in the previous quarter and City expectations of £500m.
Lloyds, which includes the Halifax, was pushed to a £3.5bn loss in 2011 by the PPI mis-selling scandal, leaving taxpayers wondering when they will get their money back.
Chief executive Antonio Horta Osorio announced thousands of job losses as part of his strategic review, as well as plans to sell off large parts of its international operations. Lloyds said it now expects to hit targets for reducing its non-core assets in 2013, rather than 2014, as it disposed of several businesses in the period, such as its onshore Dubai business to HSBC. But this hit total income which declined 7% to £4.5bn.
Lloyds cut its provision for bad debts to £1.7bn, down 31% from the previous quarter, while its exposure to troubled eurozone countries Portugal, Ireland, Italy, Spain and Greece reduced 6% to £22.9bn.