Lloyds Banking Group reports increased profits and sets aside a further £1bn for PPI claims in first half

Caitlin Morrison
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Lloyds Bank today reported an increase in profits and earnings for the six months to 30 June, but missed analyst expectations.

The figures

The banking group's underlying profit rose eight per cent to £4.5bn from £4.2bn this time last year. Pre-tax profit was up four per cent to £2.54bn from £2.45bn.

The firm will pay an interim dividend of 1p per share, up 18 per cent, and in line with expectations.

The company set aside another £1.05bn for payment protection insurance claims (PPI), with £540m allocated for other conduct provisions.

Shares in the group dipped 0.84 per cent in early trading.

Why it's interesting

The group missed estimates of a £2.9bn pre-tax profit.

Lloyds performance over recent years has been hit by large compensation payouts, and the City was expecting the bank to set aside a further £400m for PPI costs - well short of the £1bn detailed in today's results.

Meanwhile, the company is currently locked in a legal battle with business owners seeking compensations over HBOS fraud. Claimants include former Deal Or No Deal host Noel Edmonds, who recently ramped up his claim to £300m.

What Lloyds said

"Following the successful transformation of the Group to become a simple, low risk, UK focused retail and commercial bank, we have delivered another strong set of results with increased underlying and statutory profit and strong capital generation, whilst completing the acquisition of MBNA and returning to full private ownership," said chief executive Antonio Horta-Osorio.

"The UK economy remains resilient following strong employment and GDP growth in recent years together with private sector deleveraging and rising house prices. Inflation is however now rising above disposable income given the recent depreciation in sterling and, while this may affect consumption going forward, the economy should benefit from rising exports and earnings from foreign assets."

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