Lloyds Banking Group (LBG) said on Monday it will make extra provisions for payment protection insurance (PPI) claims of between £1.2 billion and £1.8 billion in its third quarter results and is suspending its 2019 share buyback program.

UK banks are setting aside more money for PPI following a rush of claims against mis-selling of the insurance ahead of a deadline on August 29.

In a stock exchange statement, LBG said: “At our half year results on 31 July 2019, the group reported a PPI charge for the first half of 2019 of £650 million, with an unutilised provision of £1,083 million relating to complaints and associated administration costs.

“At that time, the group also stated that its provision was based on the assumption that PPI information requests (PIRs) continued at the elevated level of around 190,000 per week until the deadline for submission of claims on 29 August 2019.

“In line with the broader market, the volume of PIRs received in August was higher than expected, with a significant spike in the final days before the deadline expired.

“In the final month the group received approximately 600,000 to 800,000 PIRs per week, well above the previous assumption.

“While the quality of these complaint volumes remains uncertain, given initial sampling, we believe the quality has continued at a low level.

“The group also experienced an increase in direct complaints in the same period.

“Including claims by the Official Receiver, the group now estimates that it will need to make an incremental charge for PPI claims, in addition to the provisions to 30 June 2019, in the range of £1.2 billion to £1.8 billion in its Q3 Interim Management Statement.

“The estimated range amounts are preliminary and unaudited.

“The group continues to process PIRs and the final PPI provision could be above or below the range provided.

“The group now expects capital build in 2019 to be below our ongoing 170 to 200 basis points per annum guidance and for the statutory return on tangible equity to be lower than our 2019 guidance of around 12 per cent, with the final outcome dependent on the actual charge taken.

“In line with its prudent approach, and the uncertainty around the final outcome for PPI, the board has decided to suspend the remainder of the 2019 buyback programme, with c.£600 million of the up to £1.75 billion programme expected to be unused at mid-September.

“In line with normal practice, the board will give consideration to the distribution of surplus capital at the year end and continues to target a progressive and sustainable ordinary dividend.

“As previously reported, the board’s view of the level of capital required by the group to grow the business, meet regulatory requirements and cover uncertainties reduced earlier this year from around 13 per cent to around 12.5 per cent, plus a management buffer of around 1 per cent.”