Lloyds Banking Group (LBG) has added another £90 million to its PPI provision as the number of new PPI claims continues to rise.
The latest increase comes on top of more than £18 billion it has set aside to pay successful claims since January 2011 – more than half of the overall total paid out by the finance sector so far.
It follows the announcement by CYBG – the former Clydesdale-Yorkshire Bank – which itself added £350 million earlier in the week.
At the time CYBG said its increase was due to a higher than anticipated number of claims and that it expected the ‘level of complaints to remain at an elevated level for a period of time.’
LBG has also been receiving more new PPI claims than it had budgeted for.
In February, as it released its 2017 figures, it said it had underestimated the number of new claims generated by the Arnie Schwarzenegger consumer awareness campaign for the PPI claims deadline on August 29th 2019.
Officials budgeted for an increase of 9,000 new claims a week, but were inundated with 16,000.
The figure later dropped to 11,000, but that was still 2,000 a week more than their estimate, forcing the bank to add £600 million to their provision.
Analysts at Morgan Stanley said at the time that they believed LBG would need to set aside another £1.8 billion to satisfy all likely claims – £1.1 billion more than the latest increase.
The bank made pre-tax profits of £1.6 billion – a 23% increase on the previous year. In a brief statement chief executive Antonio Horta-Orsorio referred to the digitisation process the bank is undergoing which led to the announcement of the closure of a further 49 branches earlier this week.
He said: “In February we announced our ambitious strategy to transform the group into a digitised, simple, low risk, customer focused UK financial services provider.
“We have made a strong start to 2018 and have begun implementing the strategic initiatives which will further digitise the group, enhance customer propositions, maximise our capabilities as an integrated financial service provider and transform the way we work.”