Lloyds Banking Group has set aside another £750m to cover the costs of the payment protection insurance (PPI) scandal, taking its total provision past £8bn.
The part-nationalised lender confirmed the news - broken by Sky's City Editor Mark Kleinman on Monday night - when it announced its third quarter results.
Its statutory profit before tax of £1.694bn for the nine months to September 30 reflected the additional PPI writedown and compared to a loss of £607m for the same period last year.
But the group, which is 33% owned by the taxpayer, recorded pre-tax losses of £440m in the quarter compared with a £151m loss in the same period last year - a result of PPI claims remaining higher than expected.
The total PPI provision of £8.02bn includes £1.7bn for administration costs alone.
PPI compensation is said to have helped boost consumer spending Lloyds said it received an average 11,000 complaints a week over the three month period though monthly complaint volumes were starting to fall.
The results were the first since the Treasury began the process of returning its stake in Lloyds to the private sector, selling a 6% chunk for £3.2bn to institutional investors last month.
Antonio Horta-Osorio, the bank's chief executive, said of the performance: "The third quarter was a significant one for the group.
"We returned the TSB brand to the high street, launched a revitalised Lloyds Bank, and I am pleased that the progress we have made enabled the UK government to begin the process of returning the Group to full private ownership and getting taxpayer's money back at a profit.
"These are key milestones for Lloyds Banking Group and UK banking," he said.
The continuing nature of the PPI scandal underlines how one of the banking sector's most profitable products in the years after 2000 has become a giant millstone around its neck.
The British Bankers' Association has been holding talks with the Financial Conduct Authority about the imposition of a time limit on PPI claims, although these discussions have so far been fruitless.
The rest of the major high street banks are likely to have to increase their own PPI provisions, with Barclays and Royal Bank of Scotland also reporting third-quarter results later this week.
In February, the Financial Times quoted one unnamed Lloyds shareholder as saying that it would review its investment in the bank if PPI costs continued to rise.
"If PPI costs rise further, then that could tip the balance in our decision on whether to hold or sell our shares in the company," they are reported to have said.
That sentiment has not held back the Lloyds share price despite the fact that its PPI bill has escalated further.
On Monday, the owner of Halifax saw its share price close at 79.62p, a near-doubling during the last 12 months.
As Sky News revealed at the weekend, Mr Horta-Osorio has a vested interest in seeing the shares remain above 73.6p until the second half of November. If they do, the performance over 30 consecutive trading days would crystallise a bonus that on paper is currently worth just under £2.5m.
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