Five questions answered on Lloyds’ announcement on increasing PPI provisions

Will it affect the groups’ profits?

Lloyds Banking Group today announced it is to increase its provision for the mis-selling of payment protection insurance (PPI). We answer five questions on the bank's announcement.

By how much is the bank increasing its PPI provisions?

The group said it will increase the fund by another £1.8bn, bringing the total to nearly £10bn. It said this extra provision reflects an increase in successful claims.

Has this affected the group's profits?

The banking group also announced that its underlying profits for 2013 would be £6.2bn, which is nearly double what analysts have been expecting. As a result, the bank has said it could restart dividend payments this year. Lloyds has not paid any dividends to shareholders since 2008.

What is the total cost of the PPI scandal expected to be for all banks?

The bill for all banks is expected to be around £20bn.

What else has Lloyds said?

Antonio Horta-Osorio, chief executive of Lloyds, said: "Our profitability, despite legacy issues, is testament to the strength of our business model and the commitment of our people, and has enabled the UK government to start to return the bank to full private ownership.”

The bank also announced it will be setting aside another £130m to cover the cost of compensation payments to SMEs mis-sold interest rate hedging products.

Does the government still have shares in the Lloyds bank?

Yes, the UK government still owns 32.7 per cent of the bank's shares. However, it hopes to sell these, most likely in April, because it wants the bank to return to private ownership by the next general election.

The Lloyds building in London. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.