WITH the final deadline for payment protection insurance (PPI) mis-selling claims looming at the end of August, it might have been assumed that the worst of the crisis was over for the UK’s major banks. But the scandal is still taking a heavy toll on Lloyds, which has paid out more in PPI claims than any other major player.
That the Bank of Scotland owner set aside a further £550 million for claims in the second quarter, taking the first half total to £650m, appeared to worry investors, who sent shares spiralling down four per cent yesterday morning. Shares later rallied, but still closed off more than 3%.
But the extent of PPI provisions is not the only headache for the UK’s biggest mortgage lender, with chief executive Antonio Horta-Osorio warning yesterday that the ongoing economic uncertainty was dampening business confidence.
His comments underlined the slight tonal change which has been discernible in messaging from the bank with regard to the economic risk posed by Brexit in recent months, having previously been more sanguine about its effects on the UK economy.
That said, the bank’s top brass did their best to play down fears of a no-deal Brexit. Mr Horta-Osorio said the economy is continuing to show resilience, stating that the “consumer sector remains robust with increased levels of employment and rising real wages”.
There can surely be no doubt, though, that the UK’s already weak economic growth – which even an orderly Brexit is widely expected to slow – will bring challenges to Lloyds. A no-deal Brexit will make life even tougher.
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