Lloyds Banking Half-Year Profit Narrows on Compensation Charges

By Max Colchester Features Dow Jones Newswires

Lloyds Banking Group PLC said Thursday half-year profits narrowed, pinched by a 1 billion pounds ($1.3 billion) of charges to compensate customers.

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The U.K. retail bank said that it made a half-year net profit of GBP1.3 billion compared to GBP1.59 billion a year ago. Total income rose to GBP9.3 billion from GBP8.3 billion a year ago.

The bank said that the U.K. economy continued to be "resilient" in the wake of the Brexit vote.

The bank said it was putting aside GBP700 million in extra provisions to cover future payouts to customers sold insurance products they didn't need. The provision came after a U.K. regulator extended a deadline for claims until August 2019.

Lloyds also said it was putting in place a system to compensate customers who were overcharged when they fell behind on mortgage payments. It estimates this will cost GBP340 million.

Despite these charges the board recommended a dividend of 1 pence per share.

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Earlier in the month, Chief Executive Antonio Horta-Osorio outlined a management shake-up at the bank, signalling his intention to stay at Lloyds to implement the next leg of its strategic plan. The bank will outline its next plan in February, following years of reshaping after its taxpayer bailout in 2009. Earlier this year the government finally shed the remnants of its investment in the bank.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

July 27, 2017 02:44 ET (06:44 GMT)