Lloyds bank profits slump on mis-selling scandal
[LONDON] Lloyds Banking Group on Thursday announced a 59 per cent slump in annual net profits on huge fresh costs linked to the mis-selling of a controversial insurance product.
LBG, which has been returned almost fully to the private sector after a state-bailout during the financial crisis, said in a statement that profit after tax tumbled to £466 million (S$910 million) last year compared with £1.125 billion in 2014.
It was dragged down by a further £2.1-billion provision incurred in the fourth quarter to compensate customers who were mis-sold payment protection insurance (PPI).
LBG last year set aside a total of £4.0 billion to cover the fallout of PPI, including administrative costs.
The bank's total bill for PPI now stands at £16.0 billion - far higher than any other British bank caught up in the scandal.
PPI became controversial after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments. British authorities subsequently banned simultaneous sales of PPI and credit products.
In 2011, British banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards.
AFP
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
ADB agrees to US$5 billion funds replenishment with donors
Dollar drops as employers add fewer jobs than expected in April
HSBC has no plans to dispose of further businesses, chairman says
JPMorgan unveils IndexGPT in next Wall Street bid to tap AI boom
Morgan Stanley, Frasers settle UK lawsuit over US$1 billion margin call
Danske’s net income rises 9% helped by higher interest rates