US hedge fund ValueAct has built up a 5.44 per cent stake in the group, which yesterday reported a 32 per cent slump in profits for the first half of the year, and shares powered 44.5p or 6 per cent to 794p to put it at the top of the Footsie risers’ board.
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The amount overall the bank has set aside to pay for PPI now totals a “painful” £13.4bn “rather higher than the market had anticipated” Richard Hunter, at Hargreaves Lansdown said.
The fresh provisions for PPI takes the total Lloyds has set aside to 13.4 billion pounds, more than any other UK lender in the costliest banking scandal since the financial crisis. The consensus forecast was £1.9bn, according to data provided by Lloyds.
The latest provision was around £400million more than had been expected as complaints have continued to flood in. The total includes more than £2 billion in administrative costs with 7,000 staff employed to process complaints.
They are also angered by the proportion of complaints, often by claims management firms, which are found to illegitimate.
Chief executive Antonio Horta-Osorio said: “Today’s results demonstrate the strong progress we have made in the first half of the year”.
The bank also counted the GBP117 million cost of a fine imposed by regulators for its handling of PPI complaints and a GBP318 million provision for other conduct, including a GBP175 million charge for complaints about packaged bank accounts. But it is now considering whether to use its excess capital to pay a special dividend or launch a shares buyback.
“We have delivered significant improvements in both underlying and statutory profitability, while at the same time strengthening the balance sheet, improving our customers’ experiences and continuing to support and benefit from UK economic growth”, Horta-Osório said in a statement.
Barclays also added to its PPI compensation bill this week, setting aside a further £600m, while analysts at Autonomous Research said this week that the financial services industry could face an aggregate liability of £33bn for failing to disclose commission payments to customers.
Broadcaster ITV was the biggest riser in London’s top-flight today on the announcement that US cable giant Liberty Global had increased its stake in the group – as the wider FTSE 100 Index struggled for direction.
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However, as at 11.10am on 31 July the Lloyds share price had dropped 2.6% to 84.37p, and Message issued a caveat on potentially damaging influences moving forward.
