Lloyds Banking Group has taken a fresh £1.6bn hit in the first six months of the year to cope with a new wave of claims from consumers missold payment protection insurance and to rectify treatment of mistreated mortgage customers.

The figure includes an additional £1bn charge for PPI – a scandal that has now cost the bank £18.1bn since it first started taking provisions in 2011.

António Horta-Osório, the bank’s chief executive, acknowledged that the costs marred what he described as “an important day for Lloyds” as it is the first set of results since the government sold off all its shares after the 2008 bailout.

As the bank reported a 4% rise in first half profits to £2.5bn, Horta-Osório also said the bank would always incur costs for redress to customers as a cost of doing business.

In addition to the £1bn PPI charge, the bank set aside another £540m in the first half. This includes a previously announced £100m for compensating customers hit by the HBOS Reading fraud for which two former employees were jailed in February and other issues, including the misselling of packaged bank accounts – where insurance and other products are bundled into current accounts – and compensating customers whose mortgage arrears were mishandled.

The bank announced it was reimbursing about 590,000 customers following a review of the way it handled mortgage holders who were in arrears and has set aside a total of £552m to tackle the issue.

The Financial Conduct Authority said £283m of this would be paid to customers after the the bank had acknowledged that when customers fell into arrears, it did not always do enough to ensure their arrears payment plans were affordable and sustainable.

Another £58m will be used to cover the administrative costs of paying the compensation, while another £212m is related to arrears handling of unsecured lending.

There was no increase in the provision for the HBOS Reading fraud despite the TV celebrity Noel Edmonds increasing his claim to £300m – three times the amount set aside for all 67 victims.

The banking group’s £2.5bn half-year profits were the largest in eight years – since taxpayers pumped £20bn into the bank as it took over HBOS at the height of the crisis – but its shares slipped to 68p as they were lower than analysts’ expectations. The bank is paying a dividend of 1p a share.

The additional charges for misconduct – described as “stubbornly high” by analysts at Jefferies – were larger than had been expected as the PPI scandal continued to dominate the figures. Lloyds said the latest provision was needed because complaints had increased to 9,000 a month ahead of the FCA’s time bar on complaints of August 2019.

As a result of a turnaround programme put in place by Horta-Osório, the bank is now focused on the UK and faces questions about its exposure to the economy at a time of Brexit and concerns voiced by officials at the Bank of England about the growth in lending to customers on credit cards and personal loans and to buy cars.

But the Lloyds chief executive said he was confident about the UK economy, which he insisted “remains resilient”.

“Inflation is however now rising above disposable income given the recent depreciation in sterling and, while this may affect consumption going forward, the economy should benefit from rising exports and earnings from foreign assets,” he said.

He defended the bank’s exposure to credit cards – the bank has taken over MBNA – and car lending, where the bank has a 14% market share through its Lex Autolease and Black Horse arms. Credit card lending had risen 1% a year over the last six years, he said.

Horta-Osório – who is facing speculation that he will leave now that the taxpayer stake has been sold – said he was “not going anywhere” and is working on the next strategic plan which will be announced alongside full-year results in February.