Lloyds profits up as PPI costs recede
Lloyds Bank has announced pre-tax profits for the third quarter of £1.95bn, a rise of 141% on the same period last year.
However, last year's result included a big provision to cover claims for mis-sold payment protection insurance (PPI). Underlying profit for the period was £2.08bn, up 9% on 2016. The bank did not set further money aside to cover PPI claims, having made another £700m of provisions in July. The Lloyds group has already paid out more than £18bn in PPI claims and received more following a Financial Conduct Authority (FCA) advertising campaign featuring Arnold Schwarzenegger. The FCA campaign highlighted a deadline for PPI claims of August 2019. Lloyds said it received 16,000 claims per week after the advert was broadcast, with the number then dropping back to 11,000. Should PPI rise above anticipated levels, it could pose a problem, "but we will be managing within the group's resources and financial strength which we see today," chief financial officer George Culmer said during a conference call. "Now they will be getting more claims but the end is in sight, so what they are saying is they have sufficient provision in to see it all through," banking analyst Frances Coppola said. Looking at the bank's profits, she added: "It's got out of its doldrums, cleaned up its balance sheet, recovered from its acquisition of HBOS and is moving on." Group chief executive Antonio Horta-Osorio said: "These results highlight the strength of our customer focused, simple and low risk business model." The bank's credit card arm performed well, with a reduction in "persistent" debt. Commenting on interest rates, Mr Horta-Osorio said he anticipated that rate rises would be gradual and the bank was relaxed about an increase. The figures follow on from Lloyds' half-year pre-tax profits of £2.5bn, which were the first results announced after the government sold its stake in the bank.