Lloyds profits jump 23% despite restructuring charge and £550m PPI hit

Lloyds Banking Group has thanked a cost-cutting drive for helping deliver a 23% rise in half-year profits, despite taking a restructuring charge and a £550 million hit from the payment protection insurance (PPI) scandal.

The high street lender said underlying profit rose 7% to £4.2 billion over the six months to June 30, while statutory pre-tax profits surged 23% to £3.1 billion.

But the banking giant said it set aside £550 million to cover PPI mis-selling claims in the first half of the year, bringing its total bill for the scandal to £19.2 billion.

It also was hit by £377 million in restructuring costs to cover the likes of redundancy payments to workers as it pushes ahead with a three-year strategy that will see it focus on digital banking.

The bank has been undergoing an overhaul of its workforce and branch network, having most recently announced plans to cut 450 jobs mainly affecting back office staff, while creating 255 new roles.

Lloyds is currently aiming to cut its operating costs to less than £8 billion in 2020.

Chief executive Antonio Horta-Osorio said: "We have delivered another strong and sustainable financial performance with increased statutory profits, higher returns, and a strong capital build.

"In February, we announced an ambitious strategy to transform the group for continued success in a digital world.

"We have made a strong start in implementing the strategic initiatives which will digitise the group, enhance customer propositions, maximise our capabilities as an integrated financial services provider and transform the way we work."