Bank had added another £375m to cover payment protection insurance claims
Lloyds Banking Group posted lower than expected first quarter profits after taking another £375 million hit to cover more payment protection insurance (PPI) claims.
So far Lloyds has set aside £3.6 billion to deal with PPI claims, and warned today that figure may rise further.
In full year results covering last year, Lloyds reported a £3.5 billion loss, £3.2 billion of which was funds set aside to deal with PPI claims.
However profits before tax in its core division had dropped to £682 million in the 2011 year compared with a pre-tax profit of £2.05 billion for 2010.
And non core pre-tax profits for the 2011 year were £146million against a pre-tax profit of £462 million the previous year.
For the three months to March 31, the 40 per cent state-owned bank reported a pre-tax profit of £288 million, which was well below the £500 million analysts had forecast.
This compares with a pre-tax profit of £316 million for the previous quarter.
Lloyds said it is on track to meet targets to reduce non-core assets in 2013 rather than 2014, though total income in the first quarter was down seven per cent to £4.5 billion.
The bank said it now has £12.9 billion of Treasury-backed loans still to pay back, down 77 per cent on a year ago.
Lloyds had taken a total of £157.2 billion in government-backed loans in 2009.
Exposure to eurozone countries dropped by six per cent on the previous quarter to £22.9 billion in total.
Bad debt provisions also dropped by 31 per cent to £1.7 billion in the first quarter.