No matter how hard it tries, Lloyds still cannot shake off the albatross that is PPI. Even as it announced relatively healthy profits, the provision of another £1.4bn to cover mis-selling of the payment protection insurance cast a shadow over its first-half results.
That took the total set aside to cover the debacle to a staggering £13.4bn, more than double any other bank. One would have thought Lloyds could have thrown the kitchen sink at the whole affair by now, but apparently not.
Its overall results appeared pretty healthy: revenues crept up 2% to £8.97bn in the first half of this year, while pre-tax profits rose 38% to £1.2bn. Nonetheless, the latter figure dashed analyst expectations of £1.9bn.
It also continued its token dividend, finally restarted after the financial crisis at the end of 2014, with an interim pay-out of 0.75p. But that modest sweetener disappointed investors too, despite chief executive Antonio Horta-Osorio confirming it was planning special dividends and share buybacks in the coming years. Shares slipped as much as 1.3% to 85p, before recovering to around 0.4% down.
Lloyds is generally in relatively rude health, though. Its core tier one capital cushion of 13.3% is the highest of major British banks, while its cost-income ratio of 48% is the lowest (Barclays’ is an eye-watering 70%).
Meanwhile, the government’s stake is now 15%, compared to 43% at the height of the financial crisis, having sold off 10% in a ‘drip feed’ to the market in the last year (RBS, on the other hand, is still very much under state ownership). A successful ‘tell Sid’ retail share sale, rumoured to be pencilled in for the spring, might finally help Lloyds to escape the dark years of the financial crash and the still-long shadow of PPI.