Lloyds sets aside further $2.2B for charges

Profits were also hit by a £660 million charge against the bank’s sale of the 631-branch TSB to Spanish lender Sabadell. Underlying profit, which strips out costs such as the provision for PPI, increased to GBP4.38 billion from GBP3.82 billion, as revenue increased due to higher net interest income, stable costs and lower impairment charges for bad loans.

The bank was found to have dismissed complaints without even listening to customers’ version of events, among other failings.

The taxpayer’s stake in Lloyds had peaked at 43.4 per cent but is now below 15 per cent, with a further one per cent stake being sold off roughly every ten days.

He expects the rate to start falling significantly over the next 18 months but if it does not it could cost the bank a further £3 billion over that time.#.

Profit after tax rose to 874 million (1.245 billion euros, 1.364 billion) in the six months to June from the first half of 2014, LBG said in an earnings statement.

This brings the total bill for the scandal associated with the selling of payment protection insurance (PPI) to £13.4 billion, the United Kingdom lender said on Friday, when it published its results for the first half of the year.

Barclays has just set aside an additional £750 million taking its total to £5.97 billion.

Finance director George Cumber said the number of claims and the average compensation paid per customer were higher than expected in the first half.

Lloyds also cheered its army of small shareholders by saying that having now resumed dividend payouts it will now consider using any excess capital to distribute special dividends.

He said the current process of “dripping” shares into the market, which had resulted in the disposal of around 10% of its capital being disposed of in around six months without any discount needed, was “shrewd”.

The government wants to sell part of its remaining stake in an offering to private investors, and Horta-Osório told journalists he thinks the bank’s guidance on capital returns and dividends could make the taxpayer’s remaining shares more attractive to potential buyers.

Telegraph columnist James Quinn has said that the government could avoid a retail offer of Lloyds shares and keep its “powder dry” for the exit of Royal Bank of Scotland, where a profitable alternative is unlikely given the share price remains well below the 2008 level.