Lloyds Bank ups PPI provision by £1.8bn
The bank said it saw “a significant spike” in claims in the run-up to the final deadline of 29 August. As a result, Lloyds said it would take an extra charge of £1.2bn to £1.8bn.
When the bank calculated its half year results on 31 July 2019, the group reported a PPI charge for the first half of 2019 of £650m.
The calculation was made on the assumption that PPI information requests would continue to come in at a rate of about 190,000 a week. However, a “significant spike” in the final few days before the deadline saw 600,000 to 800,000 information requests received each week.
While Lloyds remains uncertain over the quality of the information requests, and the true level of claims, it made the decision to set aside the extra cash.
A statement from Lloyds Banking Group said: “The bank also experienced an increase in direct complaints in the same period. Including claims by the Official Receiver, the group now estimates that it will need to make an incremental charge for PPI claims, in addition to the provisions to 30 June 2019, in the range of £1.2 billion to £1.8 billion in its Q3 interim management statement.”
It added that the final PPI provision could be above or below the range provided.
In February this year, Lloyds said it planned to buy back £1.75bn of its shares this year but it has now suspended the scheme as a result of the additional PPI provision. However, it said it still planned to pay a “progressive and sustainable” dividend.
Lloyds isn’t the only bank to up its PPI provision at the last minute. The Clydesdale and Yorkshire Banking Group warned last week that a surge in last minute claims could cost the bank £450m, while the Royal Bank of Scotland upped its provision by £900m.