Britain’s largest retail bank, Lloyds, has been hit by £1 billion in bills to compensate customers who were mis-sold loan insurance. Lloyds Banking Group has suffered a third quarter loss due to the new scandal but on Thursday announced that its cost-cutting programmes were ahead of target.
The recent hit extends Lloyds payment protection insurance bill past a staggering £5bn mark making the group responsible for bills worth £5.3bn.
In a bid to deal with the mounting costs, Lloyds have introduced recovery measures that include reducing its loan book, cutting costs and reigning in on bad debts. The plans have been devised by Chief Executive Antonio Horta-Osorio who is determined to turn the bank’s fortunes around.
Mr Horta-Osorio informed the media on a conference call: “The group continues to perform well in a challenging environment and we are making significant progress against our strategy.”
Lloyds is on its way to recovery with programmes aimed to cut costs to £10 billion this year, two years ahead of target and down £1 billion from 2010. The Group has announced that it expects to cut its non-core assets by an approximate £38 billion in 2012 – this notes an increase of £13 billion from what it had planned at the beginning of the year.
Mr Horta-Osorio said: “We remain confident that, by delivering our strategy to be a simple, customer-focused UK retail and commercial bank, we can rebuild the trust of our customers and other stakeholders and can deliver sustainable returns for our shareholders over time.”
Lloyds is part-nationalised after it was bailed out by the public in 2008 leaving Britain with a 40% stake in the bank.