Lloyds to set aside another £1bn to cover PPI costs

Lloyds Banking Group (Other OTC: LLOBF - news) has set aside a further £1bn to meet compensation claims for the mis-selling of payment protection insurance (PPI).

The bank, which is 8.99% owned by the taxpayer, has already been forced to fork out more than £16bn over the issue - by far the biggest share of PPI policies.

Earlier this year, the Financial Conduct Authority (FCA) put a June 2019 deadline on all claims to draw a line under the scandal, which has already cost the banking industry around £30bn.

In its third quarter trading update, the banking group published underlying profit of just under £2bn, which is broadly flat compared to a year ago.

The total income for the quarter was £4.3bn, in line with the same period last year.

The group's statutory profit before tax dropped by 15% in the third quarter to £811m.

Lloyds said that it has accounted for a further provision of £150m to cover other conduct issues, which includes £100m in respect of packaged bank accounts.

"The outlook for the UK economy remains uncertain, however the strength of the recovery in recent years means the UK is well positioned," the bank said in a statement.

Britain's largest retail bank also reported a £740m deficit in its pension fund, due to company pension schemes being hit by falling bond yields following the Brexit vote.

Over the summer, chief executive Antonio Horta-Osorio announced plans to cut an additional 3,000 jobs across Lloyds and close 200 branches by the end of next year, as part of an efficiency drive to improve dividends and profits against a more testing economic environment.

Shares (Berlin: DI6.BE - news) in Lloyds have fallen by about a quarter since June's referendum and were down to 53.5p in early morning trading.