Lloyds profits jump despite £500m rise in PPI costs

Lloyds Banking Group made a £958m pre-tax profit in the third quarter, a 28 per cent jump on the same time last year, as lending to households and businesses climbed sharply and costs fell, reports The Telegraph.

Lending to small businesses increased by 5 per cent, or £1.2bn, compared with a 1pc fall in lending across the rest of the industry.

Meanwhile, Lloyds’ mortgage lending increased by 1pc, which was slower than the 1.5 per cent average growth across the rest of the market.

However, the bank attributed this to cherry-picking the right mortgage deals to protect margins, rather than focusing solely on seizing market share.

The strength of the UK’s economic recovery helped drive a 33pc drop in impairments on bad loans to £157m.

The bank also set aside an additional £500m to cover its payment protection insurance (PPI) compensation costs, bringing the total so far in 2015 to £1.9bn, up from £1.5bn in the same period of 2014.

Regulators at the Financial Conduct Authority are considering bringing an end to the PPI scandal by putting a 2018 deadline on compensation claims.

However, Lloyds’ bosses say that deadline is too far away and they want a line drawn under the affair sooner.

“A shorter time-bar is in the interests of customers, as they would act more quickly and get money more quickly,” said finance director George Culmer.

“In terms of general awareness, two years is not required.”

Chief executive Antonio Horta-Osorio said the results show how Lloyds’ “simple, low risk, UK focused business model” leaves the bank “well placed to achieve our aims of helping Britain prosper and delivering strong and sustainable returns for shareholders.”

However, analysts said the results fell slightly short of expectations, largely because of the worsening global economic outlook.

“We see the data as a reinforcement of weaker macro and corporate appetite going into the year end and next year,” said Chirantan Barua from Bernstein Research.

“The UK is not really immune to the global slowdown.”