Lloyds Makes £3.9bn Loss After PPI

Lloyds Bank has announced a £3.9bn loss for the first nine months of 2011, blaming payment protection insurance (PPI) claims for the shortfall.

Lloyds said that during the nine months it spent £3.2bn covering PPI claims and that its total income for the period also fell 15% to £15.3bn, indicating a decline in business levels.

Lloyds said its latest results came against a backdrop of a weakening UK economic environment.

Despite the profit dip, Tim Tookey, Interim Group Chief Executive and Group Finance Director, tried to remain positive: "Although the UK economic environment has weakened in the third quarter, the flexibility in our strategic plan has allowed us to further improve our customer propositions, continue the reduction in our risk profile, strengthen our balance sheet and reduce costs. Over time, we believe our strategy will realise the full potential of our organisation for customers and shareholders."

It added that the cost of settling PPI claims was completed in the first half of the year.

'Reducing costs'

The pre-tax loss for the period ending 30 September compares with a profit of £2bn a year earlier.

Lloyds said they had delivered a resilient performance in the third quarter, which was in line with their expectations despite a weakening UK economic environment and continued competitive markets.

The report said: "We have made a good start in implementing our strategic initiatives, using the flexibility that we have in our plan to focus on further strengthening our balance sheet position and on making a strong start to the delivery of cost savings through our simplification initiatives.

"Given lower opportunities for growth in the current environment, we have continued to be very disciplined on incremental investment, with spend subject to the realisation of simplification benefits and a stringent view of risks, returns and strategic fit."

(DW)