Lloyds Banking Group (LON:LLOY) posted a significant decrease in statutory profit before tax on Thursday for the third quarter, hit by a £1.8 billion PPI charge.
Shares in Lloyds Banking Group plc were down during trading on Thursday morning.
The bank said that third quarter statutory profit before tax amounted to £50 million for the three months ended 30 September, down significantly from the £1.8 billion figure recorded the year prior.
The bank also saw its profits hit for the first nine months to 30 September, with statutory profit before tax amounting to £2.9 billion.
Lloyds Banking Group said that it took an additional £1.8 billion PPI charge in the third quarter which hit its profits.
The deadline for customers to claim mis-sold PPI was 29 August, and the Financial Conduct Authority launched a nationwide communications campaign to raise awareness of the approaching deadline.
Earlier this year in September, the bank had said that it would dedicate an additional £1.8 billion in order to settle any claims of mis-sold PPI.
Elsewhere, RBS (LON:RBS) also issued a warning at the start of September, expecting a hit of up to £900 million after a rise in PPI claims.
“In the first nine months of 2019 we have made strong strategic progress and delivered solid financial performance in a challenging external environment,” António Horta-Osório, Group Chief Executive, said in a company statement.
“I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August,” the Group Chief Executive continued.
“However, our performance continues to demonstrate the resilience of our customer franchise and business model, the strength of our balance sheet and that our strategy is the right one in this environment.”
The Group Chief Executive said: “We will maintain our prudent approach to growth and risk whilst continuing to focus on reducing costs and investing in the business to transform the Group for success in a digital world. Although continued economic uncertainty could further impact the outlook, we remain well placed to support our customers and to continue to Help Britain Prosper.”
Shares in Lloyds Banking Group plc (LON:LLOY) were trading at -1.62% as of 11:25 GMT Thursday.
Shares in the Royal Bank of Scotland Group plc (LON:RBS) were trading at +0.47% as of 11:26 GMT Thursday.