The banking giant said pre-tax profits fell 7 per cent to a worse-than-expected £2.9bn in the six months to June 30 after revealing another £550m hit from the mis-selling saga in the second quarter.
On a brighter note, Lloyds said the recent relaunch of the Halifax brand has been a success for the group.
Russell Galley, managing director of the Halifax, said: "We relaunched the Halifax brand with a modern new look and a brand new TV advert,emphasising the message that Halifax is a can-do bank that 'makes it happen' for customers - from the big moments like getting the keys to a new home, to simply paying in a cheque via our mobile app. "
Through the Halifax Savers Prize Draw, it has paid out over £3.7m to customers so far this year, adding to a total prize fund of over £60m since the draw launched in 2011.
Mr Galley said the Halifax has the country’s largest branch-based mortgage team.
"In the first half of the year we rewarded our mortgage customers with £12m through our dedicated campaigns," he said.
"We announced the winners of our first ever Halifax Mortgage Prize Draw, changing the lives of three lucky customers by paying off their mortgages in full, and awarding a further 100 with £1,000 each – a total pay-out of over £470,000.
"Our £750 remortgage cashback campaign showed our commitment to supporting customers moving to us from another lender, providing an extra boost during an expensive time."
He said the Halifax is investing in its branch network and in digital banking, including its top-rated mobile banking app and video banking service, making it easier and quicker for customers.
He said that Halifax credit card customers can now use the mobile app to “freeze” and “unfreeze” their cards, in the event they are lost or mislaid, giving them greater confidence their money is safe.
"I’m incredibly proud of the commitment and energy the team brings to work every day for our customers, and this has been recognised once again through our award wins, including What Mortgage Awards for Best Overall Lender and Best Mortgage Lender for First Time Buyers," he added.
Russell Galley: Working together to put end to financial exclusionLloyds' extra provision for payment protection insurance (PPI) came as the number of claims jumped ahead of the August 29 deadline, bringing its total in the half-year to £650m - and the total for the scandal so far to a mammoth £20.1bn.
On an underlying basis, Lloyds said pre-tax profits slipped 1 per cent to £4.19bn in the six months to June 30.
Lloyds chief executive Antonio Horta-Osorio said that, while the economy has remained resilient amid Brexit, the "continuing uncertainty is having an impact and leading to some softening in business confidence as well as in international economic indicators".
He insisted the group is "absolutely prepared for whatever happens" amid mounting fears that Prime Minister Boris Johnson is putting the UK on course for a no-deal Brexit.
Lloyds finance boss George Culmer said the level of PPI activity had "caught us by surprise", with between 190,000 and 200,000 requests for information now being made each week, though only 10% of these are converted into actual claims.
Richard Hunter, head of markets at interactive investor, said: "Yet another PPI provision of £550m for the second quarter is unwelcome, leaving Lloyds counting the days until the 29th August deadline arrives and the issue can finally be consigned to the history books.
"Meanwhile, competition in its important mortgage market remains fierce, the historically low interest rate environment is not one which favours the banks in general and management outlook from the company is relatively subdued."