State-backed Lloyds Banking Group’s provision for payment protection insurance mis-selling has topped £13billion after it yesterday took another £1.4billion hit over the scandal.

Lloyds expects complaints to start to tail off but warned that if they did not it would have to add an extra £3bn to the sum by the end of next year.

The PPI provision announced yesterday was part of a total £1.8bn set aside for conduct issues as the lender continues to be haunted by past misdeeds.

This overshadowed an improved half-year performance which saw Lloyds’ pre-tax profits rise 38% to £1.19bn despite the conduct hit and a £660million charge related to the sale of its stake in TSB to its new owner, Spain’s Banco de Sabadell.

Chief executive Antonio Horta-Osorio said the addition of a further PPI provision was “disappointing” but that the bank was able to take the action “from a position of financial and capital strength”.

PPI complaints against Lloyds have fallen less than expected and the total set aside by the bank in relation to the scandal has now reached £13.4bn, of which £2.2bn has yet to be spent.

The total includes more than £2bn in administrative costs, with 7,000 staff employed to process complaints. Lloyds has also had to go back over cases it previously rejected following fresh complaints.