Lloyds Sets Aside Extra £1.4bn For PPI Payouts

Lloyds Banking Group is setting aside another £1.4bn to deal with claims over the mis-selling of Payment Protection Insurance.

The partly taxpayer-owned bank has seen profits increase by 38% to £1.2bn in the first six months of 2015 - but this was far below analysts' expectations of £1.9bn.

The PPI scandal continues to haunt the lender - and now its total provision for mis-selling claims has reached £13.4bn, with £2.2bn in that fund unutilised.

Lloyds described the additional provision as "disappointing", adding: "It mostly reflects higher than expected reactive complaints with higher associated redress."

According to its half-year results, 98% of customers affected by PPI mis-selling in the past have been contacted by Lloyds as part of its past business review - with any remaining customers to be sent letters by the end of the year.

Announcing that the group will make an interim dividend payment of 0.75p per share, chief executive Antonio Horta-Osorio added: "Today’s results demonstrate the strong progress we have made in the first half of the year.

"We remain focused on our aim to become the best bank for customers and shareholders while at the same time supporting the UK economy."

The Treasury's stake in Lloyds has shrunk to less than 15% in recent months.

Lloyds' figures also reveal a £660m charge relating to the disposal of TSB, which is being bought by Spain's Banco de Sabadell.

In June, Lloyds was fined £117m by the Financial Conduct Authority after the regulator uncovered several examples where customers making PPI mis-selling claims were poorly treated.

Some cases saw complaint handlers reject claims on the basis that the sales process used was robust, even when this was not the case.

Other customers were told their grievance had been "fully investigated" with "appropriate weight and balanced consideration" given to all available evidence, when in reality this was not true.