Britain's Lloyds Banking Group dived into the red in the third quarter after setting aside more cash to compensate customers mis-sold the controversial insurance product PPI, it said Thursday. The UK high-street giant, which received a vast bailout during the global financial crisis, said in a results statement that it made a loss after taxation of £238 million ($307 million, 276 million euros) in the three months to September.
That contrasted with net profit of about £1.4 billion in the same period a year earlier. The lender revealed that it took another £1.8 billion hit to cover last-minute claims regarding a UK-wide practise of mis-selling payment protection insurance (PPI) over a number of years. The news sent Lloyds shares sliding 2.4 percent to 56.23 pence in mid-morning deals on London's falling stock market.
Chief Executive Antonio Horta-Osorio said he was "disappointed" that the performance was "significantly impacted" by the extra PPI charge. Most major British banks faced a rush of in compensation claims ahead of the deadline to seek compensation two months ago. Lloyds was by far the worst affected British bank in the crisis - and the latest provisions take its total bill to more than £22 billion.
That is almost half the sector's total, which stands at in excess of £50 billion. While PPI was intended to cover missed payments, for example if a customer lost their job or became ill, in many cases they were unaware it had been added to a product, while others would never have been able to make claims under the policies.
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