Lloyds warns of ‘long and difficult’ path to recovery
Lloyds said it would set aside another £375m to cover compensation for people mis-sold insurance, while it faced a “long and difficult” path to recovery.
Lloyds, 40-per cent owned by the government after a bailout during the financial crisis, said the increased provision reflected a rise in the volume of complaints received in February and March.
It adds to a £3.2bn provision last year, which analysts had thought was conservative, and follows an increase in provisions by rival Barclays last week.
Lloyds made a first-quarter statutory pretax profit of £288M, down from £316m in the previous quarter and a loss of £3.5bn in the first quarter of 2011.
Lloyds last week said it may start talks with new banking venture NBNK about its planned sale of 632 branches after an exclusivity period with The Co-op ended. It also continues to consider an initial public offering for the branches.
“At the moment we have three options on the table,” Chief Executive Antonio Horta-Osorio told reporters.
He ruled out the sale of its insurance arm Scottish Widows.
Bad debts fell 36 per cent from a year ago to £1.7bn and the bank cut its non-core assets by £12.4bn in the quarter, shrinking its bad loans faster than expected.
Loans as a percentage of deposits fell to 130 per cent at the end of March, from 135 percent at end-December, and the bank said it had reduced its target to 120 percent.
Excluding the effects of liability management, volatile items and asset sales, it made a pre-tax profit of £543m compared with £661m the year before.