Lloyds reports loss after setting aside £3.2bn for PPI complaints
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Lloyds Banking Group has reported a loss of £3.47bn for Q1 2011, after making a £3.2bn provision for potential mis-selling claims for Payment Protection Insurance.
Lloyds made a £721m profit in the same period last year.
On April 20 2011, the High Court dismissed the application of the British Bankers’ Association to seek judicial review against the Financial Services Authority and the Financial Ombudsman Service regarding the handling of PPI complaints.
Lloyds says since publication of the judgment, it has been in discussions with the FSA with a view to seeking clarity around the detailed implementation of the FSA Policy Statement of August 10 2010.
The document sets out evidential provisions and guidance on the fair assessment of customer complaints and the calculation of redress, and Lloyds has concluded that there are certain circumstances where customer contact and/or redress is appropriate.
It says while there are still a number of uncertainties as to the eventual costs from any such contact and/or redress, the group has made a provision of £3,2bn at this time.
Lloyds also revealed that in Q1 2011 it provided £5.8bn of gross mortgage lending including remortgages to UK homeowners and £10.3bn of gross lending to UK businesses.
The group achieved approximately 20% market share of gross mortgage lending in Q1.
The proportion of the mortgage portfolio with an indexed LTV of greater than 100% increased slightly to 13.5% in the quarter from 13.2% at December 31 2010. The value of the portfolio with an indexed LTV greater than 100% and more than three months in arrears also increased slightly by £0.1bn and is now £3.3bn, representing less than 1% of the portfolio.
The total value of cases greater than three months in arrears has reduced since December 2010. As a result of increased provisions, impairment provisions as a percentage of impaired loans increased from 23.5% to 24.4%.
Under the terms of its previous lending commitments to the UK government, it agreed to make available gross new lending of £67bn in the 12 months to 28 February 2011, of which £23bn would be to homeowners and £44bn to UK businesses.
It says during this period it exceeded its lending commitments.
Lending that qualified under the programme totalled £23.5bn to UK homeowners and £48.7bn to UK businesses.
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Readers' comments (1)
LD consulting | 5 May 2011 1:55 pm
OK, so there is 3.2b set aside for PPI claims. This still leaves a 270 million loss in Q1.
Which works out at £3million a day, and an increased loss of £1billion from last year. Wow - you couldnt cut forests down quickly enough if this were paper money.
This strongly suggests that Antonio Horta-Osorio is clearing the decks, and that the anticipated fire sale will be substantial - but whether this increases competition is a different matter.
Most likely, the result will be a further export of financial services to the likes of Santander and Bank of China.
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