Lloyds Banking Group has set aside an additional £550m to cover a “significant increase in claims”, its half-year results show.
Loan customers who were mis-sold PPI have until August 29, 2019 to claim for compensation.
In total, Lloyds’ financial report shows it has ringfenced £1.1bn to cover PPI compensation and expects claims to rise to 5.8 million by the deadline.
The rise in claims has had an impact on profits, too, as pre-tax profits fell seven percent in the six months to 30 June, to £2.9bn from £3.1bn at the same point last year.
Total loans and advances to customers at the retail bank came to £3.4bn in the six months to June 30, 2019, flat compared with its position at December 31, 2018.
In terms of impairments, the bank wrote off £556m in the half-year to June 30, up from £460m at the same point in 2018. The bulk - around £461m – was in the form of unsecured loans, while £104m was in UK motor finance loan and £29m coming from other forms of lending.
Group chief executive Antonio Horta-Osorio said: “In recent years we have deliberately taken a prudent approach to growth and risk and have continued to invest in the business while maintaining a relentless focus on costs.
"The success of this approach is demonstrated by our financial performance in the first half of the year, which shows the resilience of our business model and the ability to generate market leading returns in an uncertain environment.”