SHARES in Lloyds Banking Group were down more than four per cent in early trading after the institution set aside a further £550 million in the second quarter to provide for payment protection insurance (PPI) mis-selling claims.

Half-year profits at the bank were dragged seven per cent lower to £2.9 billion in the period to June 30, short of forecasts, with the Bank of Scotland owner warning that economic uncertainty has softened business confidence. It made a £3.1bn profit at the same stage last year.

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Lloyds made total PPI provisions of £650m in the first half, with the second quarter spike driven by a flood of information requests ahead of the August claims deadline.

Chief executive Antonio Horta-Osorio also signalled the bank has not been immune to the economic uncertainty sparked by Brexit. He said: “Given our clear UK focus, our performance is inextricably linked with the health of the UK economy. The economy has remained resilient, however the continued economic uncertainty is having an impact on business confidence and leading to some softening in international economic indicators.

"Companies' investment and employment intentions have both declined in the second quarter of 2019 while global growth has softened and interest rate expectations have declined.”