The extra charge pushed Lloyds, which is 40% owned by taxpayers, to a £144 million loss in the third quarter.
Stripping out the cost of PPI, though, the bank doubled its underlying profit to a better-than-expected £840 million in the three months to September 30.
The gains came after Lloyds slashed bad debts and narrowed losses from its non-core businesses.
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The chancellor now faces the prospect of forming a minority government or calling for a snap election.
The 73-year-old said a return is unlikely "given the politicised atmosphere that seems to have afflicted our set."
Chancellor Philip Hammond said the UK will make a financial proposal to the EU in the next three-and-a-half weeks.