The bill for mis-sold payment protection insurance (PPI) at taxpayer-backed Lloyds Banking Group has soared to £4.3 billion as claims against the bank continue to pile up.

The 40 per cent state-owned lender was pushed to a £439 million loss in the first half of the year as it took an additional £700 million charge for dealing with the scandal.

The escalating PPI provision will leave taxpayers wondering when they will get their money back, campaigners warned, as the share value remains less than half the price tag paid by the government.

But shares rose by more than one per cent after Lloyds revealed a lower bad debt charge, reduced eurozone exposure, increased small-business lending and higher underlying profits in its core businesses.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The numbers certainly fail to shoot the lights out but there are signs of improvement.”

Lloyds touched briefly on the most recent scandal to rock the industry − the Libor rigging affair − as it admitted some companies within the group had received subpoenas from government agencies.

But the lender said it was not possible to predict “the scope and ultimate outcome” of the various investigations or private lawsuits related to the allegations.

Lloyds, which includes the Halifax, was pushed to an annual loss of £3.5 billion in 2011 by the PPI mis-selling scandal, which has plagued the entire banking sector.

The scale of claims received was underlined by figures showing it had 1,000 staff working on “erroneous” claims alone, driven by so-called ambulance-chasing legal firms.

Chief executive Antonio Horta-Osorio said: “Mis-sold PPI policies are an industry legacy issue but by redressing those affected quickly we continue to do the right thing for our customers.

“We will tackle issues from the past in a way that will, in the long run, allow us to earn back customer trust and confidence.”