Lloyds takes extra hit over misselling

LONDON: Britain’s state-rescued bank Lloyds said it would take an extra hit of almost £2bil (US$3.3bil) to cover misselling claims, but forecast a “small” annual profit.

Lloyds, which is 33% owned by the taxpayer, added it would seek to resume shareholder dividend payments in the second half of this year, and said it was preparing for the government to sell more of its stake.

Lloyds Banking Group said it will take a provision in the fourth quarter of £1.8bil for claims relating to the mis-selling of payment protection insurance, and £130mil relating to over the misselling of interest rate hedging products to small businesses.

“The PPI provision increase is principally based on the group’s revised expectations for complaint volumes, uphold rates, and related administrative costs,” it said.

That takes the group’s total bill for the PPI scandal, which has blighted Britain’s banking sector, to almost £10bil.

Lloyds revealed the news in a trading update issued before annual results that are due on Feb 13. The bank also forecast it would make a “small” statutory profit in 2013, while it expected to beat City expectations by posting an underlying profit of £6.2bil.

It added: “The group can also confirm that ... preparatory work including the preparation of certain documents required for a possible future sale of shares in Lloyds Banking Group to the public, has commenced.” – AFP