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Lloyds back in the red as PPI claims rise again Lloyds back in the red as PPI claims rise again
(about 11 hours later)
Lloyds Banking Group has slumped to a third quarter loss after taking another £750m hit for payment protection insurance, taking the bailed-out bank's total bill for the mis-selling scandal to more than £8bn. Lloyds Banking Group slumped to a loss in the third quarter after another £750m hit for payment protection insurance took the bailed-out bank's total bill for the mis-selling scandal to more than £8bn.
Even so, the bank's chief executive António Horta-Osório said discussions were under way with its regulator at the Bank of England to start resuming dividends to shareholders for the first time since the financial crisis. The industry's total bill for PPI is now close to £20bn and Lloyds said the £8bn included £1.7bn of administrative costs.
Horta-Osório also increased his forecasts for the bank's margins and heralded the sale of part of the government's stake last month which had produced a £60m profit. Chief executive António Horta-Osório added that discussions were under way with the industry regulator to resume dividend payments for the first time since the financial crisis. He also increased his forecasts for the bank's margins and heralded the sale of part of the government's stake last month, which produced a £60m profit.
The Portuguese banker said it was likely there could be another tranche sold off next year and that supported the government's intention to include retail investors, who as a result of its rescue of Halifax already own a large chunk of shares. Last month only City investors could participate in the share sale, when 15% of the tranche was sold off at 75p a share. Horta-Osório said it was likely another tranche could be sold off in 2014 and that he supported the government's intention to include retail investors in the next sale. Last month, only City investors could participate in the share sale, when 15% of the tranche was sold off at 75p a share.
"The hard work of the last two and half years is coming to fruition," said Horta-Osório who stands to receive 3m shares – worth £2.5m at current prices – if the bank's share price can remain above the 73.6p level at which the taxpayer breaks even on its remaining 33% stake for 30 consecutive days ,or if a third of the stake is sold off at prices over 61p. But despite his upbeat sentiment the bank's shares were the biggest fallers in the FTSE 100 in early trading, losing 3.5% to 76.8p. "The hard work of the last two and half years is coming to fruition," said the Lloyds boss. He stands to receive 3m shares – worth £2.5m at current prices – if the share price can remain for 30 days in a row above the 73.6p level at which the taxpayer breaks even on its remaining 33% stake, or if a third of the stake is sold at prices over 61p.
"We are back to being a normal company," said Horta-Osório, promising to be a "high dividend" paying stock in the future. The policy for paying dividends will be outlined at the time of the full -year results in February. Speculation was mounting that a dividend could be paid for the 2013 financial years. But despite his upbeat sentiment, the shares were among the biggest fallers in the FTSE 100, closing 2% lower at 78p. He promised that Lloyds would be a "high-dividend" paying stock in the future. The dividend policy will be outlined at the full-year results in February. "We are back to being a normal company," he said.
Although the bank remained profitable over nine months, in the third quarter it slumped to a £440m loss because of the £750m provision for PPI and £600m of losses arising from losses on sales of businesses in Germany. The industry's total bill for PPI is now close to £20bn. Lloyds said its £8bn bill included £1.7bn of administrative costs. Although the bank remained profitable over nine months, in the third quarter it slumped to a £440m loss because of the £750m provision for PPI and a £600m shortfall arising from losses on sales of businesses in Germany. Over the nine months, pre-tax profit was £1.7bn compared with a £607m loss in the same period last year.
Over nine months, pre-tax profit was £1.7bn compared to a £607m loss in the same period last year. Horta-Osório said he supported the government Help to Buy scheme, which was leading to a significant jump in mortgage applications. He did not give details of the additional number of applications but said it was not just a London phenomenon. The bank is already providing one in four of home loans to first-time buyers, lending £6.7bn to more than 56,000 people by the end of September.
"The economic recovery is gathering pace," said Horta-Osório, who said he strongly supported the government's Help to Buy scheme, which was leading to a very significant increase in mortgage applications. He did not give details of the additional number of applications but said that it was not just a London phenomenon. The bank is already providing one in four of home loans to first-time buyers, lending £6.7bn to more than 56,000 people by the end of September. Recruited from the UK arm of Spanish bank Santander to turn Lloyds around, the Portuguese banker said the exit from non-core business had been completed. The bank has pulled out of 21 countries and it is now operating in just 10 as part of its effort to be a largely domestic bank. Troublesome operations in Ireland and commercial banking were also improving, with impairment charges on bad debts falling by 9% to £1.2bn.
Horta-Osório, recruited from the UK arm of Spanish bank Santander to turn Lloyds around, said the exit from non-core business was completed. The bank has pulled out of 21 countries and the bank is now operating in just in 10 countries as part of its effort to be a largely domestic bank. Troublesome operations in Ireland and commercial banking were also improving, with impairment charges on bad debts falling by 9% to £1.2bn. The bank has spun out 631 branches under the TSB brand to meet EU demands y the EU that itto reduce its branch network as a result of the £20bn of state aid it received during the 2008 and 2009 bank bailouts. This has cost around £1.6bn and the TSB branches will be floated on the stock market, probably next year.
The bank has spun out 631 branches under the TSB brand to meet EU demands to reduce its branch network as a result of the £20bn of state aid it received during the 2008 and 2009 bank bailouts. This has cost around £1.6bn and the TSB branches will be floated on the stock market, probably next year. Lloyds runs a multi-brand strategy – with Halifax and Bank of Scotland also competing with its main brand – and Horta-Osório said Halifax was benefiting from a new service which allows customers to switch bank accounts in seven days.
Lloyds runs a multi-brand strategy – with Halifax and Bank of Scotland also competing with its main brand – and Horta-Osório said Halifax was benefiting from the new service which allows customers to switch bank accounts in seven days.
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