Lloyds faces slump over PPI scandal

Taxpayer-backed Lloyds Banking Group swung to a loss in the first half of the year after it took a £3.2 billion hit to tackle the payment protection insurance scandal.

Lloyds, which is 41 per cent state-owned, reported a 3.3bn pre-tax loss in the six months to June, compared to a 1.3bn profit last year.

Stripping out the provision set aside for customers mis-sold PPI, the bank saw underlying profits plunge 31 per cent to 1.1bn as it struggled with the "subdued" economic climate.

Elsewhere, the bank confirmed it had received "a number of credible initial approaches" for the 632 branches it is being forced to sell by EU regulators.

The results are the latest from the banking sector after HSBC and Barclays unveiled figures.

HSBC said it will cut up to 30,000 jobs over the next two years as it revealed its results.