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Lloyds Bank increases PPI provision

The Lloyds Banking Group has set aside £375 million to pay for payment protection insurance compensation (PPI), whilst also reporting falling profits.

For the first quarter of 2012, pre-tax profit was registered at £288 million, 9% less than the same period in 2011, reflecting the subdued UK economic environment.

The bank have made the extra PPI provisions in reaction to an increase in the volume of complaints. This follows a move by Barclays, who increased their PPI compensation provision by £300 million last week.

In total Lloyds has set aside £3.8 billion to cover compensation.

Lloyds’ profit figure was said to be in line with expectations, due to their focus on supporting the housing market. In the first quarter of 2012, the bank has lent more than £1.3 billion to 11,500 first time buyers.

The bank is currently in the process of selling 632 of its branches, which must be sold under EU regulation by November 2013.

Lloyds ended exclusive talks with the Co-operative Group last week and is now considering other offers. They are also considering the idea of spinning off the branches as a separate group and selling shares in it on the stock market.

This was posted in Bdaily's Members' News section by Ruth Mitchell .