Insurance scandal causes Lloyds a loss of £3.5bn
Lloyds bank today revealed a loss of £3.5bn for the year 2011, following the use of £3.2bn to cover payment protection insurance claims.
The result was worse than expected and the company is among the biggest fallers in the FTSE 100, down 2.4%. The taxpayer, which owns 41% of the share, was left with a loss of £10bn.
Chief executive Antonio Horta-Osorio, who took two months sick leave on the latter part of 2011, was relatively optimistic as he believed the results weren’t ‘profit warning’. However, he reiterated that the income would be lower in 2011.
He said: ‘Given the economic outlook, in 2012, on a combined business basis, we expect income to be lower than in 2011, given further non-core asset reductions, subdued demand in the core loan book, higher wholesale funding costs, and interest rates likely to remain at low levels for longer.’
If PPI charges were to be ignored, then Lloyds had a profit of £2.7bn in 2011, up 21% in the previous year.
Total income, net of insurance claims saw a drop from £24.96bn to £20.77bn , reflecting subdued lending demand, disposals of non-core assets and a lower lending margin.
The impairment losses from bad loans also saw a reduction to £9.79bn, a trend which is expected to continue in 2012.
Mr Horta-Osorio commented on the figures stating: ‘the quality of new business is better’.