Compensation for customers who bought endowment mortgage policies and a rise in customers who cannot pay their unsecured loan has impacted earnings this year for the UK-based bank Lloyds TSB.
Overall, the bank said in its trading statement that it expects to be in line with market expectations for the year ending December 31. However, slower growth in unsecured consumer lending, combined with an increase in the level of impairment provisions for bad debts will affect the year’s results.
The bank will also register a GBP300 million charge as a result of reviewing its mortality assumptions used in the life assurance business and payments to customers who were mis-sold endowment policies.
The insurance businesses did well overall however, with Scottish Widows making good progress according to the bank, as bancassurance volumes and unit trust sales increased. Lloyds plans to repatriate GBP800 million of surplus capital to the group by the end of the year.
Group chief executive Eric Daniels said: We are continuing to make good progress against our objective to deliver sustained earnings growth, particularly against the backdrop of the slower consumer environment in the UK.