Lloyds shares sink over missold insurance

Bank posts £550m provision in second quarter for customers who were missold payment protection insurance

Shares in Lloyds fell as much as 5.3% in London, the largest fall since the week of the Brexit vote in 2016. Photograph: Reuters

Shares in Lloyds fell as much as 5.3% in London, the largest fall since the week of the Brexit vote in 2016. Photograph: Reuters

 

Lloyds Banking Group shares sank as the lender took an extra charge for a last-minute rush of calls from British customers over missold insurance.

The country’s biggest mortgage lender posted a £550 million (€604m) provision in the second quarter for customers who were missold payment protection insurance (PPI) as a long-running compensation programme draws to a close in August. It’s the biggest provision the bank has taken since the fourth quarter in 2017 and it brings its bill to above £20 billion.

George Culmer, outgoing chief financial officer, said the additional charge was “disappointing”. The August deadline “encourages customers to make contact and get paid out and we are seeing that happen. However, the extent at which it’s happening has caught us by surprise.”

He said the bank was getting upwards of 190,000 requests a week, with only 10 per cent being converted into claims.

The PPI charge is well above market estimates, and shares in Lloyds fell as much as 5.3 per cent in London, the largest fall since the week of the Brexit vote in 2016.

Analysts at Jefferies International said the PPI charge “casts a pall over otherwise benign” results. – Bloomberg