The UK's biggest mortgage lender Lloyds Banking Group has posted weaker-than-expected third quarter pre-tax profits, after making a further £1.8 billion provision for mis-sold loan insurance payouts.
The bank posted pre-tax profits of £50m for the three months to the end of September, below forecasts of £163m, according to a company-provided average of analyst forecasts.
Lloyds' underlying profits of £1.82 billion also fell short of analyst expectations of £1.98 billion, after a rise in impairments to £371m, largely due to a single-name corporate loan failure and lower used car prices.
Britain's most costly consumer banking scandal continued to haunt Lloyds, with the fresh charge at the top of a £1.2-1.8 billion forecast range published by the bank last month.
The provision followed a surge of last-minute claims filed ahead of an August deadline and prompted the bank to suspend an eagerly-anticipated share buyback programme.
Payment protection insurance (PPI) policies were sold alongside a personal loan or mortgage to cover repayments if borrowers fell ill or lost jobs, but many were unsuitable.
The deluge of PPI claims had already dented third quarter results for rivals RBS and Barclays, sending the industry's final compensation bill above an estimated £50 billion.
Lloyds said it was cutting costs faster than expected and reduced its total costs target for the year by £100m to £7.9 billion.
Loans and advances to customers increased by £6.2 billion to £447.2 billion in the third quarter with growth in the lender's open mortgage book, small business lending and motor finance.
Net interest margin, a key measure of profitability, remained in line with guidance at 2.88%.
The bank today also announced a shake-up of its leadership team, with Chairman Norman Blackwell retiring from the role at or before the bank's 2021 annual meeting, while chief operating officer Juan Colombus will step down in July.