The bill for mis-sold Payment Protection Insurance (PPI) has moved above the £10bn mark for Lloyds Banking Group.
In the first half of 2014, the tax-payer backed lender made an extra £600 million worth of provisions, taking the total amount the bank has set aside to £10.4bn.
The bank said that whilst the volume of complaints related to PPI had been lower than anticipated over the first half of 2014, they still estimate a further 155,000 complaints.
The news came as the bank announced a 32% increase in underlying profits in the first half of 2014to £3.8bn and said it would ask the Bank of England for permission to begin paying dividends in the second half of the year, a development expected to ease the sale of the Government’s 25% stake following their 2008 bail-out.
Lloyds put the strong trading performance down to an improving UK economy that meant charges on bad loans declined by 58% compared to last year.
However, the banks pre-tax profits fell from £2.1bn to £863m over the period, this was due to the PPI charge and other issues including a £218m fine from US and UK authorities over rigging interest rates, as well as restructuring costs related to the EU-mandated sell-off of TSB.
Chief Executive of Lloyds, Antonio Horta-Osorio commented: “We continue to successfully execute our strategy, by investing in the products and services that our customers need.”