London - Lloyds (LLOY.)(L) took a charge of 3.2 billion pounds ($5.3 billion) Thursday to compensate consumers who have been refunds on the policies of insurance, and economic woes of the Ireland also filled the pain on the British Bank.
Lloyds, 41% held by Britain after a rescue of the credit crisis, made the provision against payment protection insurance (PPI) complaints after banks lost a British court case on how the policies were sold to millions of customers.
Investec analyst Gareth Hunt, said the PPI charge was double what awaits the market and could be bad news for other lenders mired in the saga.
"At least, it is clear, we now know what is the charge and the Bank can move forward, but it is certainly more important than expected." "It shows everyone will be share the same pain," said Hunt.
Lloyds shares were down 8.7% to 53 pence in morning trade, making the stock the worst performer on the FTSE 100 blue chip index (.)(FTSE), which decreased by 0.1%.
Losses from bad loans to Lloyds raised 2.6 billion pounds in the first quarter of 2.4 billion a year ago, but down from 3.8 billion in the previous quarter. He said the first quarter hit 500 million more expected books, mainly because of the Ireland, where the met Office has reached $ 1.1 billion.
The coup double put-selling insurance provision and pushed Ireland Lloyds in a statutory loss of 3.5 billion pounds in the first quarter, down from a profit of 721 million a year ago.
Margin net interest of Lloyds - the difference between what a bank charges for loans and what it pays to borrow – also fell to 2.07% of 2.12% late last year.
Lloyds was expected to swing a profit before taxes of 5 billion pounds this year, and analysts a profit of 8 billion pounds in 9 months of the year is a command.
HOPING TO DRAW THE LINE PUT-SELLING ISSUE INSURANCE
Last month, banks have lost an appeal before the High Court to counter the new rules on how they must sell PPI.
The competition watchdog has since possible probing been put-selling of PPI, which usually covers the purchases paid by instalments in case the purchaser becomes ill or unemployed.
There are approximately 12 million exceptional political, and one Analyst believes Lloyds has been exposed to about a third of this - involving the banking industry as whole could face 9 billion pounds of provisions of the PPI debacle.
Following discussions with the financial supervisory agency, Lloyds said "certain circumstances." where contact with the customer or repair will be appropriate it gave no details on the scale of possible compensation.
It will affect other banks and some overseas companies. Until now, the more conservative attitude was from Bank of America (BAC).(N), which, in October, took a 592 million of reserve requests related to PPI possible.
RBS reports results Friday, and it too may be affected. RBS shares were 4 per cent, while Barclays fell by 1%.
Morgan Stanley analysts last year estimated banks could have to pay 5.1 billion pounds in compensation to customers.
The Association of British Bankers (BBA) was examined or not to a new legal challenge against the decision of PPI but Lloyds said that it would not take part in any challenge fresh as he wanted to draw a line in the episode.
"We no longer participate in the judicial review of the BBA.". We refuse to continue a debate long ago with the regulator, "Chief Executive Antonio Horta-Osorio stated to journalists."
Britain also has an 83 per cent holding in the Royal Bank of Scotland (RBS).(L) after bailing out the two banks with billions of pounds of taxpayers in the crisis of credit money.
Because rescue Lloyds and RBS have been ordered by European regulators to sell a variety of assets.
Lloyds seeks to sell 600 retail banking branch, but last month, the independent Commission on banking (CVI) - established to propose the reform of the industry, said that Lloyds may have to sell more to improve competition.
Lloyds reiterated his surprise at this proposal, which could delay the sale of the branches agreed with the EU, adding it was communicating with potential buyers.
National Bank Australia UK (NAB).(AX), NBNK Investments (NBNK.)(L), the Virgin Money and Spanish lender BBVA (BBVA).(MC) have all been touted as buyers of the branches.
Analysts should also Lloyds to sell its Scottish Widows and Place St James s (FLS.)(L) divisions in Horta-Osorio strategic review of the company, although Horta-Osorio refused to comment Thursday on this issue.
(Edition by Hans Peters and Greg Mahlich)
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