Lloyds share price dips as new PPI charge pressures profits

Lloyds share price dips as new PPI charge pressures profits
Written by:
Tsveta van Son
31st July 2019
Updated: 11th March 2020
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Lloyds Banking Group’s (LON:LLOY) share price has opened lower this Wednesday, as the blue-chip lender disclosed another charge over the payment protection insurance (PPI) scandal which pressured its performance in the second quarter of the year. The update comes after the bailed-out lender recently agreed to pay £140 million to Standard Life Aberdeen (LON:SLA) as it looks to exit a £100-billion asset management contract early.As of 08:08 BST, Lloyds’ share price had given up 3.99 percent to 52.88p. The stock is underperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.17 percent lower at 7,633.83 points.Lloyds posts interim resultsLloyds announced in a statement this morning that its half-year statutory profit after tax had come in at £2.23 billion, four percent lower than in the prior-year period, with underlying profit and lower restructuring costs offset by an increase in volatility and other items and a higher PPI provision charge. The bailed-out lender booked a further £550-million provision in the second quarter over the PPI scandal as it saw a rise in information request volumes in the second quarter, ahead of a regulatory deadline on PPI claims next month.“The Group has continued to make strong strategic progress during the first half of 2019 and delivered a good financial performance with market leading efficiency and returns,” the group’s chief executive António Horta-Osório commented in the statement. “The economy has remained resilient although economic uncertainty has led to some softening in business confidence as well as in international economic indicators.” Lloyds declared an interim ordinary dividend of 1.12 pence per share, up five percent.FTSE 100 banking season startsLloyds is the first FTSE 100 lender to report this earnings season, with Barclays (LON:BARC) and StanChart (LON:STAN) reporting tomorrow. Bailed-out peer RBS (LON:RBS) will follow on Friday. HSBC (LON:HSBA) reports on Monday, August 5.According to MarketBeat, the FTSE 100 lender currently has a consensus ‘buy’ rating, while the average target on Lloyds’ share price stands at 70.06p.

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