Lloyds bank profits fall sharply due to £1.8bn PPI charge
Bank is latest to suffer from late surge in claims as Q3 pre-tax profits drop by 97 per cent
Lloyds has become the latest bank to have its profits hit by the late surge in payment protection insurance (PPI) complaints. The banking group has put aside a further £1.8 billion ($2.3bn) to cover PPI claims before the August deadline, nearly wiping out its third-quarter profits.
The PPI charge was the main driver of a 97 per cent drop in pre-tax profits, to £50 million for the 3 months to 30 September from a profit of £1.8 billion in the same period last year. The result was weaker than expected.
The decline was exacerbated by a 31 per cent jump in impairment charges, to £371 million and a 6 per cent drop in revenues to £4.2 billion.
The latest charge is at the top end of estimates, and takes the group’s total bill to £21.8 billion.
Lloyds shares were the biggest faller on the FTSE 100 index in early trading, dropping 2.7 per cent to 56p.
Lloyds also announced it would soon start the search for a new chairman as incumbent Norman Blackwell approaches the recommended nine-year maximum time on its board, the Financial Times reported.
Blackwell, who has been a non-executive director since 2012 and chairman since 2014, will step down before the bank’s annual meeting in 2021.