Lloyds share price drops after bank pays £600m over PPI
Lloyds Banking Group saw its shares drop on Thursday after revealing it had set aside £600m for payments over the PPI mis-selling scandal.
Shares in Lloyds were down 2.9 per cent at pixel time.
The £600m formed part of legacy conduct payments of £1.3bn that severely affected the bank's pre-tax profits in the first half of the year.
The legacy payments made by Lloyds take the amount payed out by the industry to £23bn, with Lloyds accounting for £10bn of the total.
Even without the legacy payments profit before tax would still have fallen short of the £2.1bn made in the first six months of 2013.
Despite the underwhelming results, Lloyds still beat expectations, with underlying profit before tax, a measure of a company's performance that excludes one-off events, coming in at £3.8bn – ahead of analysts expectations.
Chief executive Antonio Horta Osorio said:
As the UK economy normalises, the benefits of the strategic decisions we made in 2011 are now being seen. In the first half of 2014 we increased income and grew lending in our key customer segments, while reducing our cost base and impairments substantially. The 32 per cent increase in our underlying profit, and the increase in our fully loaded common equity tier 1 ratio to 11.1 per cent from 10.3 per cent pro forma at the end of 2013 while addressing a number of legacy issues, demonstrates the strength of the business model we have created.