PPI, SLA settlement and Brexit weigh down flat Lloyds profits

António Horta-Osório

Bank of Scotland’s owner reported flat statutory pre-tax profits at £1.6bn as it revealed a further £100 million charge for payment protection insurance claims.

Lloyds Banking Group has set aside a further £100m to cover payment protection insurance (PPI) mis-selling as it reported flat quarterly profits.

There was also a hit of some £339m for cutting its contract short with Standard Life Aberdeen.

Earlier this year, Standard Life Aberdeen won a dispute with Lloyds over a £109bn investment mandate deal, from which the bank withdrew abruptly last year.

The dispute dates back to last February, when Lloyds decided that a major account managed for subsidiary Scottish Widows by Aberdeen Asset Management should be pulled, because Aberdeen had since merged with Standard Life, bringing the firm into “clear and material” competition with Scottish Widows.

Meanwhile, the latest Lloyds figures show the group set aside £750m for PPI claims.

A deadline of 29 August 2019 has been set by the UK’s financial regulator for the final PPI mis-selling claims to be made.

More than £34bn has already been paid out in compensation across the industry as a whole, and major banks have set aside billions more for future claims.

The latest £100m charge takes Lloyds’ total provision to £19.525bn.

The bank also warned that continuing Brexit uncertainty could have a further impact on the UK economy.

However, the lender said it had not seen the quality of its assets deteriorate.

The group’s chief executive, António Horta-Osório, said: “While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model, and in particular our market leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders.”