Lloyds to be hit by another shock PPI bill of £500m, but bank shares could still be sold off by October
Blow: The state-backed lender is expected to be fined up to £300m after an investigation into the Libor scandal
Lloyds Banking Group is to set aside another £500m to compensate customers mis-sold payment protection insurance – taking its total bill for the scandal to more than £10bn.
The state-backed lender is also expected to be fined up to £300m after an investigation by US and UK regulators into the rigging of the Libor benchmark interest rate.
The double-whammy is likely to take the shine off a 25 per cent rise in profits to £3.6bn in the first half of the year under chief executive Antonio Horta-Osorio.
Lloyds has benefited from the upturn in the UK economy, with bad debts forecast to have halved in the first six months of the year as the number of borrowers struggling to pay back loans falls.
The strong results, due on Thursday, will trigger fresh calls for the bank to be returned to the private sector having been rescued in the financial crisis with a £20bn bailout from the taxpayer.
It is thought the government’s remaining 24.9 per cent stake in the lender could be sold off as soon as October.
Rising house prices and renewed business confidence have boosted the banking sector in recent months.
Royal Bank of Scotland last week reported first-half profits of £2.7bn – nearly double what it made in the same period last year.
TSB, which was spun out of Lloyds this year on the EU’s orders after the 2008 bailout, is also likely to report strong results, although rival Barclays is expected to deliver lower profits as it counts the cost of restructuring under chief executive Antony Jenkins.
British banks have set aside more than £20bn to compensate customers mis-sold PPI. Barclays and RBS have also been penalised over the Libor scandal.
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