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Lloyds’ profits nearly wiped out by PPI compensation

Emma Lunn
Written By:
Emma Lunn

A surge of last minute PPI mis-selling claims in August saw Lloyds’ quarterly profit drop from £1.8bn to £50m

Lloyds Banking Group has put aside an additional £1.8bn to cover a surge in payment protection insurance (PPI) complaints before the August claims deadline.

The latest charge is at the top end of the bank’s estimates, and takes the group’s total bill to £21.8bn.

The sum nearly wiped out the banking group’s profit for Q3 2019. The bank made a profit of £1.8bn in the third quarter last year – but just £50m for the three months to 30 September this year. The payouts also knocked profits for the first nine months, which fell 40 per cent to £2.9bn.

The Financial Conduct Authority (FCA) set a 29 August deadline for claims for compensation for PPI, which prompted a rush of claims.

Lloyds has the biggest bill of all the banks for mis-selling of the insurance policy, potentially paying out more than £40bn.

António Horta-Osório, Lloyds’ chief executive, said: “In the first nine months of 2019 we have made strong strategic progress and delivered solid financial performance in a challenging external environment.

“I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August.

“We will maintain our prudent approach to growth and risk whilst continuing to focus on reducing costs and investing in the business to transform the group for success in a digital world.”

Last week saw the Royal Bank of Scotland post a quarterly loss after being forced to put aside an extra £900m to cover a last-minute surge in PPI claims.