The lender took a further provision in the fourth quarter for a potential hit linked to its motor finance business, leading its pretax profit to miss expectations.

Lloyds Banking Group has nearly tripled the amount it is setting aside to cover the car finance mis-selling scandal to £1.2bn, knocking its profits for the year. It is putting aside an extra £700m to cover potential compensation payments, on top of £450m earmarked earlier.

Lloyds Banking Group Plc reported earnings that missed expectations in the fourth quarter as the lender set aside an additional £700 million for possible costs it will face for a regulatory probe into its motor finance business.

Lloyds Banking Group warned on Thursday of "significant uncertainty" around the impact of a British motor finance inquiry, after it set aside another 700 million pounds ($882 million) to cover a potential compensation scheme.

Lloyds has announced that it has earmarked £1.2bn to cover potential compensation costs linked to motor finance commission arrangements, as the bank's annual profit dipped by 20%.

Lloyds Banking Group (NYSE:LYG) shares climbed 5.6% in Thursday morning trading in the U.S. after announcing a £1.7B ($2.14B) share buyback program along with a 15% dividend hike. Still, Q4 2024 earnings came in worse than expected as more capital was set aside for potential costs it will incur for a motor finance investigation.