The boss of Lloyds Bank said he is “disappointed” after its finances took a beating from a major PPI claims bill.
Lloyds said on Thursday that claims by customers who were mis-sold PPI insurance would cost it £1.8 billion in the third quarter of the year.
Although the bank had warned investors it would face a major charge, this was in the upper end of the £1.2 billion to £1.8 billion range they had been told to expect.
Chief executive Antonio Horta-Osorio said: “I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August.
The PPI claims ate into the bank’s pre-tax profit, which reached £2.9 billion over the first nine months of the year, Lloyds said, compared with the £3.06 billion analysts had expected.
Meanwhile, net income fell 3% to £13 billion, below the £13.13 billion forecast by analysts.
But Mr Horta-Osorio remained upbeat about the bank’s results, saying it had made “strong strategic progress and delivered solid financial performance in a challenging external environment”.
“Although continued economic uncertainty could further impact the outlook, we remain well-placed to support our customers and to continue to help Britain prosper,” he said.
Lloyds said its economic forecast, which is used to calculate some of its predictions, depends on an “orderly” Brexit.
However, it also warned that some things are out of its control, including the risk of other countries following Britain out of the EU, and political instability which could be caused by a general election.
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On a conference call on Thursday, finance director William Chalmers said the unstable environment was hitting investment, though this should hopefully come to an end within the next year.
Asked about what preparations the bank was making ahead of December’s general election, he said: “We will be committed to working with both the politics and the country, whichever way it goes.”
The latest charge brings Lloyds’ PPI bill to well above £26 billion, according to Fiona Cincotta, an analyst at City Index.
It is the latest in a line of banks to report massive PPI costs after the August deadline for claims passed.
Mr Chalmers said he was “very confident” that the bank’s estimate of how many PPI claims there are is correct. However, he could not rule out more PPI surprises in future.
“When (former Lloyds chief financial officer) George Culmer walked out the door, he said never say never on the issue,” he said.