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Britain’s Lloyds banks lower profits on rising claims
LONDON, July 31, 2019 (BSS/AFP) – British bank Lloyds said Wednesday that
first-half net profits slid as it took another hit from mis-sold credit
insurance before a key claims deadline, and cautioned over the outlook.
Net profits dipped four percent to o2.2 billion ($2.7 billion, 2.4 billion
euros) in the first six months of this year compared with the same portion of
2018, Lloyds Banking Group (LBG) said in a results statement.
Pre-tax profit registered a seven-percent decline to stand at o2.9
billion.
LBG allotted another o550 million to compensate for its role in the
Payment Protection Insurance (PPI) scandal that has blighted British retail
banks.
The extra charge was taken in the second quarter, before a key August
regulatory deadline for customers to submit claims to all affected lenders.
For the half year, PPI claims stood at o650 million, taking LBG’s total
PPI compensation to an astonishing o20.075 billion.
That makes Lloyds the hardest hit bank — and is roughly half the total
bill that the entire UK sector faced over the long-running scandal.
There is now just one month left for British customers to claim for PPI
compensation from their banks, under a deadline set by the Financial Conduct
Authority regulator.
Customers have until August 29 to file complaints to their lenders over
historic claims — or risk losing the chance to get their cash back.
Experts estimate that some 64 million PPI policies were sold in Britain
between 1990 and 2010.
– ‘Good’ performance –
Chief Executive Antonio Horta-Osorio meanwhile described LBG’s overall
performance as “good”.
But he also cautioned over economic uncertainty both at home — with
Britain facing exit from the European Union at the end of October — and
abroad.
“The group has continued to make strong strategic progress during the
first half of 2019 and delivered a good financial performance with market
leading efficiency and returns,” Horta-Osorio said in the statement.
“The economy has remained resilient although economic uncertainty has led
to some softening in business confidence as well as in international economic
indicators.
“In this environment our strategy continues to be the right one and we are
well placed to support our customers and continue to help Britain prosper.”
Back in 2011, British banks lost a high court appeal against tighter
regulation of PPI, which provided insurance for consumers should they fail to
meet repayments on a credit product such as consumer loans, mortgages or
payment cards.
PPI rose to notoriety after it was revealed that many customers had been
sold it without understanding that the cost was being added to their loan
repayments. Many customers never knew it was added.
BSS/AFP/HR/1425