Bailed-out Lloyds Banking Group has made a £3.2bn provision for the cost of mis-selling payment protection insurance (PPI), driving the bank to a loss in Q1.
Lloyds reported a pre-tax loss for the three months to 31 March of £3.47bn, including the PPI provision, down from a £721m profit in Q1 2010.
Chief executive António Horta- Osorio said the PPI write-down was the "sensible, prudent, right thing to do''.
"Drawing a line under this issue'' is in the long-term interests of the bank, he said on a call with reporters today.
Elsewhere, Lloyds said it expects the cost of the government's bank levy for the full year to be about £260m.
Lloyds also used its first quarter results to hit back at calls from the Independent Commission on Banking (ICB) for the bank to sell-off more of its branches.
The bank, which has already been forced by the EU to close 600 high-street branches under the terms of its bail-out package, said further closures were not in the interests of customers.
It said: "We are surprised that the [ICB's] Interim Report is proposing a potential expansion of the divestiture of at least 600 branches which we believe is not in the interests of our customers and may significantly delay meeting the commitments agreed between the UK government and the EU. "
The ICB will publish its final report in September. Lloyds said it will continue to debate the issue of closures with the ICB in the meantime.
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