By Jonathan Davies

The amount of money set aside by Lloyds Bank for compensation over Payment Protection Insurance (PPI) has passed £13 billion.

Last month, Lloyds was fined a record £117 million by the Financial Conduct Authority (FCA) over the PPI mis-selling scandal.

The second quarter marked the final three months in which banks can set aside their PPI bill against corporation tax

Lloyds said it was disappointed with the extra bill. It came after "higher than expected reactive complaints with higher associated redress".

The news comes as Lloyds Bank reported a 38% rise in pre-tax profits in the first half of the year. The bank, which is still part state-owned, posted profits of £1.19bn compared with £863 million in the same period last year.

Those figures include a £600m charge related to the sale of TSB.

Lloyds said it increases net lending to small and medium-sized enterprises (SMEs) by 5% (£1.5 billion) in the year to June, in what it says is a declining market. In the first half of the year, it said it helped to create 48,000 new businesses.

Since a strategic review in 2011, Lloyds says it has increase SME lending by 23%, whereas overall lending in the market has dropped 16%.

Jen Tippin, Managing Director of Retail Business Banking, said: “Small businesses are vital to the UK economy and we’re proud to have supported another 48,000 start-ups in the last six months as part of the Group’s commitment to helping UK businesses prosper. Starting a business can be challenging but with our guidance, support and mentors network, we’re committed to giving the next generation of entrepreneurs the help they need.”