lloyds losses narrow

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The BBC reports that Lloyds Banking Group has narrowed its pre-tax losses for 2012 to £570m, from £3.5bn the previous year, states chartered accountant Harris & Co.

The group, which is 40%-owned by the government, said its losses were primarily because of making provisions of £3.6bn for the mis-selling of payment protection insurance (PPI).

This included £1.5bn set aside in the fourth quarter for PPI.

Chief executive Antonio Horta-Osorio was awarded a bonus of £1.5m in deferred shares.

These shares will not be released until 2018, Lloyds said.

The total bonus pool at the bank fell 3% to £365m.

Last month, Lloyds chairman Sir Winfried Bischoff said that employees" bonuses this year would be the "lowest undoubtedly of any bank".

"Ahead of plan"

On an underlying basis, which excludes one-off items such as the PPI provisions, Lloyds" profit more than quadrupled from a year ago to £2.6bn.

"The substantial progress we made in 2012 means that we are now ahead of our plan to transform the group, and this was reflected in our stronger underlying financial performance in the year," Mr Horta-Osorio said.


"Since setting out our strategy in June 2011, we have significantly strengthened the balance sheet and substantially improved efficiency and focus, while continuing to work through legacy issues.

"We are investing in our simple, lower-risk, customer-focused UK retail and commercial banking model, and in value-for-money products and better capabilities to continue to support UK households, businesses and communities."

Shares in Lloyds fell 2.5% in opening trade.

Mis-selling costs

Lloyds is the UK"s biggest retail bank and has now set aside about £6.8bn to cover the mis-selling of the insurance.

Last week, it was also fined £4.3m for delaying compensation payments to customers over PPI mis-selling.

In its results statement, the bank also said it had increased its provision for mis-selling interest rate hedging products to small and medium-sized business to £310m in the fourth quarter, taking its total provision for these products to £400m in 2012.

Lloyds also said it was being investigated by authorities in the UK, US and elsewhere over submissions it made to the setting of the Libor rate and that some of the group"s companies had been named as defendants in private lawsuits, including purported class action suits in the US.

But it said it was "currently not possible to predict the scope and ultimate outcome of the various regulatory investigations or private lawsuits".

However, Lloyds" finance director George Culmer said the bank was not being targeted by regulators.

Barclays, Royal Bank of Scotland and UBS have all been fined hundreds of millions of pounds for manipulating the key Libor rate, while several other banks are also under investigation.

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