The costliest scandal in British banking has a long tail.
Lloyds Banking Group Plc, the country's biggest mortgage lender, added another 1 billion pounds to the compensation it expects to pay after it wrongly sold customers insurance that didn't cover them or would never pay out.
Wednesday's provision brings the amount the lender has set aside for the payment-protection insurance scandal to 17 billion pounds -- more than any other bank. So far, the scandal has cost Britain's four biggest banks 33 billion pounds ($40 billion).
While CFO George Culmer was at pains to stress this would be the last "big" provision the bank expects to take, it's worth noting the full impact of the scandal is still playing out.
The real long-term cost of PPI will be a reduction in the money banks can make from cross-selling products to their customers, something Gadfly noted in May.
Lloyds's latest figures back that up: the bank's non-interest income as a proportion of total revenue has in recent years declined to about 33 percent from 38 percent.
This suggests that if banks want to grow revenue in the future, they will have to focus on lending rather than cross-selling things such as insurance. But at a time when interest rates are at record lows, profitable lending is hard to achieve. Add the threat of a Brexit-induced economic slowdown, and it's likely the pressure to cut costs will persist.
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