The additional provision of £2.45 billion for PPI complaints in 2018 ‘significantly impacted’ the profits of Lloyds Banking Group (LBG) according to chairman Lord Blackwell.
He said: “Our weak spot continued to be the ongoing legacy from past misconduct, with another significant provision for PPI mis-selling as we approached the deadline for customer compensation claims last August.”
£21.87 billion overall
Chief executive Antonio Horta-Osorio added that pre-tax profits for the year were down by 26% to £4.4 billion because the group had added £2.45 billion to their PPI compensation pot.
The new money brought the group’s overall PPI bill to £21.87 billion so far.
The group’s annual report also revealed that it had only managed an initial review of 60% of the surge of complaints including an amazing 5 million PPI requests submitted before the claims deadline in August of last year.
The initial check on the PPI requests – clients wanting to know if PPI had been attached to any of their agreements – was low at 10%.
However, a total of £2.2 billion was paid out to successful claimants during the year.
By December 31st £1.57 billion remained in the PPI pot which the group believes will be enough to cover the redress owed to future successful claimants, but admitted it was still uncertain about whether further cash might be needed.
The report said: “A number of risks and uncertainties remain including processing the remaining PIRs and outstanding complaints.
The cost could differ from the Group’s estimates and the assumptions underpinning them, and could result in a further provision being required.”
Lloyds has the biggest exposure to PPI complaints in the industry and has paid the lion’s share of the £37.2 billion paid in compensation since January 2011.
Analysts have suggested the total PPI bill for the industry could top £50 billion, but the true figure won’t be known until the summer when the industry expects to have reached a final decision on all outstanding claims.