Lloyds Banking Group has been forced to set aside another £600m to compensate customers who were missold payment protection insurance, as £1.1bn in charges for “legacy” conduct issues ate away at reported profits.
It had already been quite a week for the partially state-backed bank on the regulatory front, FastFT reports.
Lloyds was attacked for its “highly reprehensible” behaviour in the Libor rate-rigging imbroglio by no less than the Bank of England, after it became the first lender to be fined for manipulating benchmark rates to cut the cost of a financial crisis rescue scheme, effectively costing the UK taxpayer millions of pounds.
Together with the fresh £600m hit on PPI one of the industry’s biggest scandals, those long-running regulatory woes drove Lloyds’ statutory pre-tax profit down by nearly 60 per cent during the first half of the year, to £863m.
On an underlying basis, however, the results were significantly better than analysts expected, with profit surging by nearly a third to £3.8bn as impairment charges on bad loans plummeted - a trend mirrored across the industry.
Said chief executive António Horta-Osório: “In the first half of 2014, we continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity, by investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency.
“As a result, we substantially improved our underlying financial performance and delivered a statutory profit, despite further charges for legacy issues.”
