Lloyds profits up by nearly 25 per cent despite another £460m PPI hit

Lloyds Banking Group has posted half year pre-tax profits of £3.1bn, 23 per cent higher than the same time last year.

The lender said its balance sheet remained strong, with its common equity tier one capital ratio increasing to 15.1 per cent pre-dividend.

It said it would pay an interim dividend of 1.07 pence a share, eight years after the UK government pumped in £20bn to save it, and a year after the Treasury sold its last remaining shares from the bailout.

Lloyds’ share price rose nearly 2 per cent in early trading on today’s report, but it remains lower than it was a year ago.

Chief executive António Horta-Osório said the bank had “delivered another strong and sustainable financial performance with increased statutory profits, higher returns and a strong capital build.”

However, the banking group, which includes Bank of Scotland, also revealed that it has needed to put aside another £460 million in costs for payment protection insurance (PPI) mis-selling claims.

The latest provision means the lender has now allocated more than £19.2bn to settle the claims.

Lloyds said the latest PPI charge was “largely driven by a potentially higher total volume of complaints and associated administration costs due to higher reactive complaint volumes received over the past six months and ongoing volatility”.

It added: “The remaining provision is consistent with an average of approximately 13,000 complaints per week through to the industry deadline of the end of August 2019.”

It said that every extra 1,000 complaints a week above that level would cost it another £150m.

The bank said it had sold an estimated 16 million PPI policies since 2000, including policies that were not mis-sold and those that had been successfully claimed upon.

It has already dealt with about 53 per cent of those policies.

Lloyds said it also has the largest digital bank in the UK, with active users increasing to almost 14 million, including about 10 million mobile banking users.

However, it stressed it was committed to maintaining the UK’s largest network of branches, despite its announcement of 49 branch closures in April.