Lloyds Banking Group has become the latest casualty of the ongoing PPI repayment scheme after reporting that their profits for the third quarter have been almost wiped out after they took a hit of over £1bn.
The total bill around the PPI scandal for the bank has now risen to a staggering £22bn, making it the most recent company to be forced to repay mis-sold PPI to millions of mortgage owners across the United Kingdom.
Whilst Lloyds still managed to make a £50m profit over the last three months, the PPI scandal has loomed over its revenue since the beginning of 2019 and is seen by many as the most likely cause for Lloyds’ declining profit margins over the last year.
In the second quarter alone, profits shrank by almost 40% and net income dropped by 3% to around £13.3bn, causing major concerns amongst investors.
The quarterly report focused the blame almost squarely on PPI, which has seen an explosion of claims from homeowners leading up to the August deadline earlier this year.
Whilst all major UK banks are expecting a significant bill from The City, Lloyds is facing the largest payout for mis-selling PPI to homeowners who either didn’t want the plan or didn’t need it.
The company also own Halifax, who operate as the UK’s biggest mortgage lender, and is likely why Lloyds have found themselves required to pay out millions to homeowners across the country.
However, Lloyd’s CEO suggested that the numbers were positive despite the dip in profits, suggesting that the current economic climate was increasingly challenging to perform well in.
Growing economic uncertainty from the current political stage has meant that banks have been struggling to grow – but many are predicting growth over the coming months.
However, the numbers do not look promising. In the same three months one year ago, Lloyds made an approximate profit of £1.8bn, a number that has almost halved with these new reports.
The company’s shares dropped by around 2% as the report was released and are expected to fluctuate throughout the day before settling around closing.