Further PPI setback for Lloyds

Lloyds Banking Group has posted a drop in annual profits after revealing another £2.1 billion hit for payment protection insurance (PPI) mis-selling.

The high street lender said the extra charge for PPI took its total bill for the scandal last year to £4bn.

This left bottom line pre-tax profits 7% lower at £1.6bn in 2015.

However, Lloyds said underlying profits rose 5% to £8.1bn and confirmed it was sharing out a £353.7 million bonus pot among staff, working out at £4,600 per employee on average.

Group CEO Antonio Horta-Osorio has been awarded a deferred shares bonus of £449,000 and has secured a 6% pay rise to£1.13m –his first since joining the group in January 2011.

Investors were also offered some cheer as Lloyds announced a £2bn dividend payout, with a 2.25p divi and 0.5p special divi per share.

Mr Horta-Osorio shrugged off recent sharp falls in the group’s share price amid a wider sell-off in the banking sector on concerns over the impact of a global economic slowdown.

“Our differentiated, UK-focused, retail and commercial business model continues to deliver, with our financial strength, cost leadership and lower risk focus positioning us well in the face of current market uncertainty,” Mr HortaOsorio said.

He remained tight-lipped on the bank’s position on Britain’s vote on European Union membership, saying it was a “matter for the British people”.

However, the group will discuss the June 23 referendum at its upcoming board meeting.

Lloyds has been forced to make further provisions for PPI compensation payments.