Total provisions of £3,575 billion to cope with the compensating of mis-sold payment protection insurance (PPI) contributed towards a £570 million loss for Lloyds Banking Group last year.
In its yearly results for 2012, the 40% state-owned bank admitted that the cost of compensating millions of customers affected by the mis-selling scandal, £1.5 billion of which was set aside in the final quarter of last year, was a primary factor in its overall losses.
Lloyds stated that the losses were down from the £3.5 billion reported in 2011, whilst its underlying profit rose to £2.6 billion.
In a statement, the bank declared it was now "ahead of our plan to transform the Group, and this was reflected in our stronger underlying financial performance in the year".
Chief executive of Lloyds Banking Group, Antonio Horta-Osorio, who has faced criticism for accepting a £1.5 million bonus, despite the losses, said: "While legacy issues, notably Payment Protection Insurance, resulted in the Group still reporting a loss at the statutory level, our achievements resulted in a significant improvement in both Group underlying and statutory performance, and continued strong returns, above our cost of equity, being delivered in our core business."
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