Lloyds Banking Group has increased its provisions for expected Payment Protection Insurance by a further £500 million in the third quarter, bringing the total amount provided to £13.9bn.
Some £2.1bn is still set aside but remains unutilised.
The third quarter management statement explained that reactive complaint volumes were broadly flat compared with the first half and higher than estimated, but the associated provision of £375m was slightly lower than the sensitivity run-rate provided at the half year due to lower average redress.
The cash spend in the third quarter reduced to £600,000 and included remediation and Past Business Review repayments.
Group chief executive António Horta-Osório said that a number of risks and uncertainties remain, in particular in respect of complaint volumes, which are primarily driven by complaints management company activity.
“The current provision continues to assume a significant decrease in reactive complaint volumes over the next 15 months, compared with trends in recent quarters,” he said, adding that if reactive complaint volumes do not decline or the decline is delayed, this could lead to additional provisions.
Impairment charges totaled £336m, 64 per cent lower than 2014, driven by a reduction in run-off business and improvements in all banking divisions.
Meanwhile, in the three months to the end of September, pre-tax profits rose 28 per cent to £958m, up from £751m during the same period last year.
Mr Horta-Osório added: “These results, coupled with our simple, low risk, UK focused business model, underpin our confidence in the group’s future prospects and our strategic direction.”