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.
More top news
The mother of a missing RAF serviceman has hired a private investigator to help search for her son after raising thousands of pounds.
Dozens of potential suspects have been identified in connection with historical child sexual abuse allegations in football, police say.
Kirk Douglas, star of film classic Spartacus and one of Hollywood's last surviving Golden Age actors, has turned 100.