Lloyds is to detail the extra charges when it reports 2014 results on 27 February
Lloyds Banking Group is expected to set aside hundreds of million pounds more to compensate customers mis-sold loan insurance.
This could take its overall bill for mis-sold payment protection insurance (PPI) to £12bn.
The policies were meant to cover repayments if customers fell ill or lost their jobs, but were often sold to people who did not need them or would be ineligible to claim.
Lloyds took a £900m PPI charge at the time of its third-quarter results in October 2014 and warned its bill would rise by another £600m if complaint levels stayed at the same level in the fourth quarter, Reuters reports.
Since then, complaints about PPI have shown no sign of easing.
Figures from the FCA showed that £376m had been paid out in October, up 7.4% on the average payout in the previous three months.
Lloyds is set to detail the extra charges when it reports 2014 results on 27 February.
Other banks are also likely to increase their provisions when they report full-year results, adding to a total bill for the industry of about 24 billion pounds.