Lloyds Banking Group says it has set aside another £1bn for personal protection insurance claims (PPI), £700m more than it was planning to.
It said the extra provision would cover “reactive claims” of about 9,000 per week through to August 2019.
It has also set aside £540m to cover packaged bank accounts and mortgage arrears handling.
It estimates it will have to pay £283m to repay 590,000 mortgage customers mistakenly charged from 2009 to 2016.
The bank says it will repay this because of the way in which it applied policies relating to financial difficulty assessments.
The Group is also currently undertaking a review of the HBOS Reading fraud.
It is in the process of paying compensation to the victims of the fraud, for which it set aside £100m in the first quarter.
The announcement came as the bank reported half-year profits of £2.5bn, its biggest in eight years and 4% higher than a year ago.
They are its first set of results since returning to private ownership in May.