By Max Colchester
LONDON-- Lloyds Banking Group PLC on Friday reported a rise in
first-half profit despite the bank taking a GBP1.4 billion ($2.18
billion) provision to compensate customers who were wrongfully sold
insurance products.
The bank, which is 15% owned by the British government, said net
profit for the six months came in at GBP677 million, compared with
GBP574 million in the same period last year, as impairment charges
continued to drop. Revenue rose 2% to GBP8.96 billion.
The uptick in results came despite the provision to compensate
customers who were sold insurance products they didn't need.
Payment Protection Insurance was widely sold alongside an
assortment of financial products, including loans and credit cards,
to cover customers' repayments should they fall sick or lose their
job. Lloyds sold an estimated 16 million such policies since 2000,
according to its annual report. For several years the bank's
management has claimed that the number of claimants is on the wane.
So far the bank has provisioned GBP13.4 billion to cover PPI
claims.
In June Lloyds was fined GBP117 million by a British regulator
over its processing of PPI complaints.
Meanwhile, the U.K. government is slowly selling down its stake
after mandating an investment bank to drip shares into the market.
Over the course of the year it has shed a 10% stake in the
lender.
In February, regulators gave the bank the all clear to start
paying its first dividend since its bailout. On Friday, the group
announced an interim dividend of 0.75 pence a share.
The bank reported a 6% rise in net interest income to GBP5.7
billion.
Write to Max Colchester at max.colchester@wsj.com
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