Lloyds Banking Group today set aside another £750m sterling to compensate customers mis-sold loan insurance, overshadowing an almost doubling of its third-quarter underlying profit.
The bank, 33% owned by the UK government, has now set aside more than £8 billion to deal with the most expensive consumer finance scandal in British history, far more than any other bank.
UK banks have in total set aside over £17 billion to compensate customers mis-sold payment protection insurance (PPI).
The policies were meant to protect borrowers in the event of sickness or unemployment but were often sold to people ineligible to claim.
Lloyds reported an underlying profit, not including the PPI charge, of £1.5 billion, up 83% on the same time the year before, reflecting an improved interest margin and lower costs and in line with analysts forecasts.
Lloyds, now Europe's fourth-biggest bank, is in talks with Britain's financial regulator about the possibility of restarting dividend payments next year and will set out its dividend policy alongside its 2013 results next February.
"The bank is back to profitability. We are back to being a normal company so therefore we have started in this quarter discussions with our regulator. We are going to be a high dividend paying stock in the future," chief executive Antonio Horta-Osorio told reporters.
The UK government began offloading its shares in Lloyds through the sale of a 6% stake in September and Horta-Osorio saidhe expected a further sale next year.
"I think it is very likely that there will be a significantother tranche (sold) in 2014," Horta-Osorio said.
Lloyds CEO set for £2.3m bonus
Lloyds chief executive Antonio Horta-Osorio is on course to land a share price linked bonus currently worth around £2.3m within weeks.
A bonus scheme announced earlier this year will see Mr Horta-Osorio qualify for three million shares should the stock price remain above 73.6 pence for 30 trading days. This represents the average price paid by the UK government when the bank was rescued.
The shares have been trading above this level since October 9 and if they remain so at the close on November 20, the chief executive will qualify for the bonus.
It means that on paper he will receive £2.3 million-worth of stock based on the share price of 77.9 pence following third quarter results announced today.
However, Mr Horta-Osorio will not be able to sell the shares until 2018 under the long-term bonus plan.
He would also qualify for the scheme should the government sell at least 33% of its shareholding in the group, at more than 61 pence per share. But following the disposal of 15% of its holding - or 6% of the group - in September, the Chancellor pledged no more would be sold for 90 days.
It means that the chief executive looks set to qualify for the bonus first under the share price criteria.
In the last 12 months shares in the bank have nearly doubled in value from around 40 pence as investors began to see improved profitability in the business as the UK economy recovers.
If the shares continue to rise after Mr Horta-Osorio qualifies for a bonus, its value will increase further. At 100 pence a share, the three million shares would be worth £3m.