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Lloyds says quarterly profit drops on £1b PPI charge
[LONDON] Lloyds Banking Group Plc, Britain's largest mortgage lender, posted a 15 per cent decline in third-quarter profit as it took a £1 billion (S$1.7 billion) charge to compensate customers who were wrongly sold loan insurance.
Pretax profit fell to £811 million from £958 million a year earlier, the London-based bank said in a statement Wednesday. Excluding the charge and other one-time items profit was £1.91 billion, falling short of the £2.04 billion average estimate of six analysts compiled by Bloomberg News.
Chief executive officer Antonio Horta-Osorio, 52, remains tangled in Britain's costliest banking scandal as he attempts to navigate record-low interest rates and a potential economic slowdown sparked by the country's vote to leave the European Union. His bank has now taken more than £17 billion pounds in charges for payment protection insurance over the past five years, more than any other major British lender.
Failure to stem the costs for PPI is limiting capital available for dividends at the UK focused retail and commercial bank, while a rate cut from the Bank of England following the Brexit vote is squeezing profitability from lending. The firm's core Tier 1 capital ratio rose to 13.4 per cent from 13 per cent at the end of June, even as the company took a hit to capital from its pension fund swinging to a £740 million deficit in the period.
Lloyds has fallen 24 per cent this year in London trading for the second-worst performance among Britain's five-largest banks, behind Royal Bank of Scotland Group Plc.
The British government resumed selling its 9.1 per cent stake in Lloyds earlier this month, abandoning a previous plan to hold an offering for individual investors.