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Another PPI hurdle for Lloyds

The banking group's shares fell after a less-than-ideal third-quarter update.
October 28, 2015

The deadline for payment protection insurance mis-selling claims cannot come soon enough for Lloyds (LLOY), which was forced to set aside a further £500m in the third quarter. This headache should start to recede, if industry data are anything to go by: £301m was paid out by lenders in August, the lowest monthly total since September 2011.

IC TIP: Buy at 74p

A dip in underlying operating profit - which strips out PPI claims - did not help matters. Excluding TSB, the bank made £2bn on this measure in the period, down 3 per cent year on year. Tougher trading in commercial banking, plus a tough second quarter comparator for insurance, depressed non-interest income. This is expected to improve slightly in the fourth quarter.