Lloyds Banking Group has put aside another £375 million to pay Payment Protection Insurance (PPI) claims.
The announcement came as the Group announced pre-tax profits of £288 million for the first three months of 2012, a fall from the final quarter of last year (£316 million).
Results were improved on the same period as last year, however, when the 40% Government owned bank announced pre-tax losses of £3.5 billion.
The boss of Lloyds Banking Group, Antonio Horta-Osorio said the results reflected the subdued UK economic environment.
The bank has been forced to put more funds aside to pay back customers who were mis-sold PPI, with the £375 million provision added to the £3.2 billion that was previously announced.
It said that it had made even more funds available because of 'the increase in the volume of complaints being received'.
In the first three months of the year, the bank helped a number of first time buyers, completing more than £1.3 billion to 11,500 people buying their first home.
Lending to first time buyers boosted the bank's overall mortgage lending for the first quarter of the year to £5.7 billion.
Lloyds also made good progress towards its target to lend £12 billion to small and medium sized businesses this year.
The provider advanced some £3.25 billion to 30,000 firms in the three months, and is aiming to lend to 100,000 businesses before the end of 2012.
In an update of its branch sales, Lloyds said that it was continuing discussions with the Co-operative Group which remained its preferred buyer.
However, the exclusivity agreement between the two organisations has come to an end, with other potential buyers able to bid for the 632 branch network.
Banking venture NBNK made an offer for the branches last month.
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