Lloyds reveals lower-than-expected profits

Women use a Lloyds ATM machine Credit: Reuters

Taxpayer-backed Lloyds Banking Group has revealed lower-than-expected profits after it took an additional £375 million hit to cover payment protection insurance (PPI) claims.

The 40 per cent state-owned bank has now set aside nearly £3.8 billion to deal with PPI compensation after a recent increase in the volume of claims.

Lloyds, which warned that the final cost of the PPI mis-selling scandal may change, revealed pre-tax profits of £288 million for the three months to March 31, compared with £316 million in the previous quarter and City expectations of £500 million.