Taxpayer-backed Lloyds Banking Group has revealed lower-than-expected profits after it took an additional £375 million hit to cover payment protection insurance (PPI) claims.
The 40 per cent state-owned bank has now set aside nearly £3.8 billion to deal with PPI compensation after a recent increase in the volume of claims.
Lloyds, which warned that the final cost of the PPI mis-selling scandal may change, revealed pre-tax profits of £288 million for the three months to March 31, compared with £316 million in the previous quarter and City expectations of £500 million.
Lloyds, which includes the Halifax, was pushed to a £3.5 billion loss in 2011 by the PPI mis-selling scandal, leaving taxpayers wondering when they will get their money back.
Chief executive Antonio Horta Osorio announced thousands of job losses as part of his strategic review, as well as plans to sell off large parts of its international operations.