Lloyds Banking Group has announced it made a statutory profit before tax of £1.69bn in the first nine months of this year, a turnaround of just over £1.5bn after it posted a pre-tax loss of £607m at the end of September 2012.
Lloyds’ interim results for the first nine months of this year, published today (29 October), revealed the figure included an additional charge for mis-selling personal protection insurance business of £750m, taking the total figure for PPI redress to £8.02bn.
Lloyds said the increase is due to higher than projected costs in the three months to September 2013 reflecting the acceleration of cases with the Financial Ombudsman Service, higher reactive volumes, as well as an increased scope of pro-active mailings combined with higher response rates.
Of the £8.02bn, approximately £1.7bn relates to administrative costs.
Lloyds’s said the total amount provided for PPI represents its best estimate of likely costs and a number of risks and uncertainties remain, in particular complaint volumes, uphold rates, average redress costs and the outcome of the FCA enforcement team investigation.
It also cited the sell-off of shares in advisory firm St James’s Place as providing an additional boost to profit.
Lloyds is also participating in the government’s Help to Buy scheme, designed to provide access for first-time buyers and home movers to mortgages at up to 95 per cent of the value of the home purchases.
The banking group claims to be the UK’s largest lender to first time buyers, providing one in four mortgages and lending £6.7bn to over 56,000 first-time buyers at the end of September.
In support of the scheme it has introduced a range of mortgage products through Halifax and Bank of Scotland. Lloyds said it believes this programme “will increase liquidity in the housing market and to the wider economy, including through increased activity in the construction sector”.
