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| Lloyds Banking Group reports loss on PPI provisions | |
| (40 minutes later) | |
| Lloyds Banking Group has announced a first quarter loss, after making a £3.2bn provision for potential mis-selling claims by customers who took out payment protection insurance (PPI). | |
| In April, UK banks lost a judicial review over PPI compensation. | In April, UK banks lost a judicial review over PPI compensation. |
| The decision by LLoyds to settle PPI claims may put pressure on other banks to do the same. | |
| Lloyds reported a loss of £3.47bn for the first three months of the year. It made a £721m profit a year ago. | Lloyds reported a loss of £3.47bn for the first three months of the year. It made a £721m profit a year ago. |
| Lloyds also took a charge of £1.1bn to allow for further falls in commercial property prices in the Irish Republic. | |
| However, the bank's core business showed growth as customer loans and deposits rose from £842bn to £847.8bn. | |
| "The bank as a whole appears to be getting better and appears to be taking a larger market share," said Ralph Silva, banking analyst at SRN. | |
| Before the provision for PPI compensation and other one-off items, the bank said it had made a profit in the quarter of £284m. | |
| The results were the first presented by new Lloyds chief Antonio Horta-Osorio, who replaced Eric Daniels on 1 March. | The results were the first presented by new Lloyds chief Antonio Horta-Osorio, who replaced Eric Daniels on 1 March. |
| Industry hit | |
| PPI policies are supposed to repay a person's loan if their income drops because they fall ill or lose their job. But thousands of people have received compensation because their policies were mis-sold. | |
| The Financial Services Authority (FSA) published guidelines last year which said banks should contact all past PPI customers and invite them to complain if they thought they had been mis-sold PPI. | |
| UK banks challenged those guidelines, arguing that the rules were unfair because they were retrospective. | |
| But last month a High Court judge rejected their challenge, meaning that banks could face huge compensation bills. | |
| The BBC's business editor Robert Peston said Lloyds' decision to settle with PPI claimants was a unilateral one, but could lead to other banks following suit. | |
| "The size of Lloyds' charge implies that the big British banks will in total take a £9bn hit to settle PPI claims," he said. |