Ann: Increase in legacy PPI costs, page-4

It's a big provision, and I suspect the market will freak out.

If one gently examines the accounts though, & if we assume the full provision of 450p is taken up, this is a 9% reduction in tangible equity base (9% reduction off H1, so excluding H2 profits).

Some context:
- since the third quarter update, share price has already fallen > 28% - that's implying the market's expectation since pre-third quarter release is a permanent loss of equity in excess of 3x the amount of this provision (and, I will add, the business in my view was already materially and unjustifiably mispriced prior to Q3 updates)
- margin of safety is so enormous that, all other variables held constant, if the full 450m provision is taken up (and ignoring H2 profits) the current valuation off the new tangible equity base would increase to 0.45x, up from 0.41x at last UK close. This is hardly a demanding multiple
- if the market is being logical (I'm being ironic here Ofcourse), it would price in 40% of the mid-point estimate provision to be reduced off its prior expectation of the value of this equity. I suspect the market's response will not be logical, and I'm very sorry but I'm going to exploit this upcoming hysteria. Thanks in advance to all those panicking, fearful herding apes.