Lloyds profits drop by 11% after £2.1bn hit for PPI payouts

Lloyds Banking Group has posted a drop in annual profits after revealing another £2.1 billion hit for payment protection insurance (PPI) mis-selling.

The high street lender said the extra charge for PPI took its total bill for the scandal last year to £4 billion.

This left bottom line pre-tax profits 11% lower at £1.6 billion in 2015.

But Lloyds said underlying profits rose 5% to £8.1 billion and confirmed it was sharing out a £353.7 million bonus pot among staff, working out at £4,600 per employee on average.

Boss Antonio Horta-Osorio has also been awarded a deferred shares bonus worth £449,000.

Mr Horta-Osorio, the group chief executive, has also secured a 6% pay rise to £1.13 million - his first since joining the group in January 2011.

But 4% of the salary rise will only be paid in shares, which will be awarded when the Government sells its final 9% stake in the group.

Lloyds added its annual staff bonus pot was down from £369.5 million in 2014.

Investors were also offered some cheer as Lloyds announced a £2 billion dividend payout, with a 2.25p divi and 0.5p special divi per share.

Mr Horta-Osorio shrugged off recent sharp falls in the group's share price amid a wider sell-off in the banking sector on concerns over the impact of a global economic slowdown.

He said: "Our differentiated, UK-focused, retail and commercial business model continues to deliver, with our financial strength, cost leadership and lower risk focus positioning us well in the face of current market uncertainty."

He remained tight-lipped on the bank's position on Britain's vote on European Union membership, saying it was a "matter for the British people".

The group will discuss the June 23 referendum at its upcoming board meeting, he said.