No dividend for Lloyds as PPI bill nears £10bn
LLOYDS set aside another £1.8bn for PPI compensation claims and £130m for interest rate swaps redress yesterday.
The bills wipe out any hope of a 2013 dividend for shareholders, while regulators are considering letting the bank pay dividends at “a modest level” from the second half of 2014.
The lender has now set aside £9.8bn to cover PPI redress payments.
It is on track to compensate all small businesses who were mis-sold rate swaps by April, one month ahead of the deadline set by the Financial Conduct Authority.
Lloyds had to hike the provision for that redress because it has found it owes more firms compensation than first thought, the settlements are higher than expected and the administration costs are unexpectedly high.
Of the £530m total set aside for the swaps redress scheme, £218m is for administration costs.
The bank’s shares tumbled 3.97 per cent, hitting the profit to be made by the government if it chooses to sell more stock in the bailed-out bank.
The next window for any such announcement comes next month, and the government is expected to begin letting retail investors, as well as institutions, buy stock in the selloff.
Lloyds chief Antonio Horta Osorio said the bank remains strong as its capital ratio is now 10.3 per cent, up from 8.1 per cent a year ago.