A recurring theme has run through so many of Lloyds’ figures over the last couple of years, and today’s announcement that another £500 million has been set aside for the mis-selling of PPI brings the total to £8 billion. Although allocating large amounts for this misdemeanour is not unique among UK banks, Lloyds has left everyone else in the shade in terms of the volume of funds required to rectify the situation.
Striking a considerably more positive note is the 83% increase in the bank’s underlying profits, helped by fewer write-downs in bad debts, reduced costs and improving margins. The underlying profit for the third quarter is now £1.52 billion, and the management’s outlook for the future is unsurprisingly optimistic. Although it would be advantageous to remove the overhanging cloud of PPI, the day-to-day running of the bank is on a considerably sounder footing.
Investors will now be asking how close we are to the time when the UK government will extract itself from the bank. Judging by the success of the Royal Mail IPO, confidence in Whitehall must be high that it could actually turn a profit. And that would be a handy ahead of any potential general election.