Lloyds sets aside another £1.8bn for PPI provision

In these results, the banking group also announced it expected to report an underlying profit of £6.2 billion for 2013, more than double than that of 2012

As well as the money set aside for PPI claims, the group announced a further provision of £130 million relating to the sale of interest rate hedging products to SMEs. The PPI provision increase is based on expectations for complaint volumes, uphold rates, and related administrative costs.

The statement also confirmed comments made by the Chancellor in his Mansion House speech and in the Autumn statement that work on a possible future sale of shares in Lloyds to the public had begun.

Commenting on the update, António Horta-Osório, Group Chief Executive, said:

“Over the last three years we have reshaped, simplified and strengthened the business to create a low-risk efficient Retail and Commercial bank that is focused on our customers and on helping Britain prosper. Our significant progress in delivering sustainable improvements in our capital position and 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.

"We expect to apply in the second half of 2014 to restart dividend payments and to deliver progressive and sustainable payments to shareholders thereafter. This will be another important step in our journey to rebuild trust and confidence in our Group.”