Lloyds allocated about £4 billion for payment protection insurance during the first quarter of 2016. According to the bank, the Financial Conduct Authority’s decision to impose a PPI deadline had urged majority of Lloyd customers to make a refund claim as soon as possible. As the biggest UK lender, taxpayer-backed Lloyds sold PPI to ineligible prospects.
Lloyds’ actions had it see a 7 per cent reduction in its annual pre-tax profits down from £1.8 billion in 2015 to £1.6 billion in 2016. Despite the profit reduction, its shares had closed down up to 13 per cent to 70.57p.
A Lloyds spokesperson said it welcomed the FCA decision on imposing a PPI claims deadline. It said that it brought certainty for both customers and shareholders.
Taxpayer-backed RBS’ shares fell by 7 per cent to 226.6p after its allocation of £3.6 billion to cover its conduct and litigation costs from a US court-imposed civil lawsuit. The lawsuit questions RBS’ toxic mortgage business in the US before the 2008 financial crisis.
It had also set aside an estimated £2.5 billion to refund consumers mis-sold PPI.
Michael Hewson, chief market analyst at CMC Markets, said: “Every year we hope that the time has come for the bank to turn a corner and every year we return disappointed.
“CEO Ross McEwan must be wishing he had never taken on the task of turning the bank around when he took over the reins in August 2013.”