By Lawrence White
LONDON (Reuters) -Lloyds Banking Group said on Thursday its third quarter profit fell 36% and it downgraded its performance guidance for the year, hurt by a previously announced 800 million pound charge to compensate customers for the motor-finance mis-selling scandal.
The British lender reported pretax profit for the July-September period of 1.17 billion pounds($1.57 billion), down from 1.8 billion in the same period a year ago and broadly in line with the average of analysts’ forecasts of 1 billion pounds.
Britain’s biggest mortgage lender said the impact of compensating customers for the probe meant it now expects to make a return on tangible equity of around 12% this year, down from previous guidance of 13.5%.
Lloyds, one of Britain’s biggest players in the motor finance industry, on Oct. 13 said it had set aside the additional 800 million pounds after the Financial Conduct Authority’s (FCA) proposed redress scheme showed that more historical cases dating back to 2007 were likely eligible for compensation. That brought the bank’s total provisions for the motor finance scandal to 1.95 billion pounds.
Lloyds said it would challenge the regulator on its methodology, further prolonging the uncertainty around the final toll for what is in any case likely to end as one of Britain’s costliest consumer scandals for the banking industry.
($1 = 0.7451 pounds)
(Reporting By Lawrence White; Editing by Tommy Reggiori Wilkes)
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