LONDON (Reuters) - Lloyds Banking Group's underlying profit almost doubled in the latest quarter thanks to an improved interest margin and lower costs, although the bank took another big bill to compensate customers for mis-sold insurance products. Lloyds said it took a 750 million pound ($1.2 billion) charge for the mis-selling of payment protection insurance (PPI) in the third quarter, meaning it has now set aside more than 8 billion pounds for the scandal, far more than any other bank. It said PPI complaint volumes were declining at a slower than expected rate and the response to its letters to customers offering compensation where appropriate had been higher than forecast. The PPI charge hit its statutory profit. Underlying profits at Lloyds, which is 33 percent owned by the UK government, were 1.52 billion pounds in the third quarter, up from 831 million the year before and in line with the average forecast according to a Reuters poll. "The outlook for the UK economy now looks more positive and the group's business model is well matched to the economic environment," the bank said in a statement. The interest margin is the difference between the interest rate paid to savers and the interest rate charged to borrowers. ($1 = 0.6199 British pounds) (Reporting by Matt Scuffham; editing by Steve Slater and Tom Pfeiffere)