Lloyds Banking Group said its recovery was ahead of plan today as it swung out of the red with half-year profits of £2.1 bn in an impressive turnaround on losses of £456m a year earlier. The marked improvement came as taxpayer-backed Lloyds slashed costs further and saw a 43% plunge in bad debts, to £1.8bn in the six months to June 30. But the group revealed another £450m to cover compensation for mis-selling of payment protection insurance (PPI), taking its total bill to a mammoth £7.3bn. Lloyds revealed it was also under investigation by the Financial Conduct Authority (FCA) over its management of a supplier and PPI complaints handling procedure. This follows recent reports uncovering evidence of potential bad practice in its PPI complaints handling. Lloyds – which was fined £4.3m in February by the City watchdog after up to 140,000 customers had their PPI compensation payments delayed – said it was "disappointed" by the FCA probe and has set aside £50m to cover administration costs for the investigation.