LLOYDS BANK SURPRISE £1.8BN PPI PROVISION

Lloyds Banking Group has announced a surprise increase in provisions for payment and protection insurance (PPI). Giving an update on its 2013 results, the UK bank said that it was making yet another provision in the fourth quarter of £1.8bn for legacy PPI business. The provision brings the cost of PPI claims in 2013 for Lloyds Bank to £3.1bn. The bank has now set aside almost £10bn for PPI in total. Average monthly PPI complaint volumes reduced to approximately 37,000 in the fourth quarter of 2013, 24% lower than volumes in the third quarter and 56% down on the fourth quarter of 2012. However, despite the reduction in complaints the fourth quarter, Lloyds Bank said that it expects a slower decline in future volumes than previously expected. Following statistical modelling it now expects to receive a further 550,000 complaints, accounting for approximately £1.1bn of the fourth quarter increased provision.