Lloyds back in the red over PPI

Lloyds had make a pre-tax profit of £1.1bn in the same three months a year ago Bailed-out Lloyds Banking Group has sunk to a first quarter loss after taking a larger than expected provision of £3.2bn to cover the costs of misselling payment protection insurance. New chief executive Antonio Horta-Osorio has also upped the impairment charge for bad loans by £500m more than expected, blaming the situation in Ireland where the bank was a major lender following its rescue of HBOS during the 2008 banking crisis. It is expecting another 10% fall in commercial property prices in Ireland. The £3.2bn provision for PPI forced the bank to report a pre-tax loss of £3.4bn barely three months after the former boss Eric Daniels had heralded the return to a first full-year profit for the bailed-out bank since the crisis. The bank had make a pre-tax profit of £1.1bn in the same three months a year ago and insisted that its performance was “satisfactory” on what it calls a combined business basis, which strips out the costs associated with the integration. On this measure profits were £284m. The PPI provision follows the high court judgement on 20 April which upheld a ruling by the Financial Services Authority that banks should compensate customers retrospectively for PPI. Signalling a new approach to PPI, where banks have stalled on compensation, Horta Osorio said on Thursday: “It is appropropriate to take a provision now and move on.” The £3.4bn of losses also included integration costs of £333m. The bank reiterated its surprise at the independent banking commission’s decision to suggest more branches should be sold off in addition to 600 branches demanded by the EU in return for almost £20bn of taxpayer aid. For the whole of 2010 the bank took a £13.1bn hit from bad debt provisions – some £5.7bn related to problems in Ireland and Australia inherited from the controversial HBOS deal. Lloyds Banking Group Banking António Horta-Osório Payment protection insurance Jill Treanor guardian.co.uk

Posted by on May 5, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.