British bank Lloyds returns to profit in first half

4th August 2010, Comments 0 comments

Britain's state-rescued Lloyds Banking Group said Wednesday that it bounced back into pre-tax profit in the first half, after a massive loss in 2009, as bad debts continued to fall.

Pre-tax profit stood at 1.6 billion pounds (1.9 billion euros, 2.5 billion dollars) in the six months to the end of June, which compared with a loss of 4.0 billion pounds in the same part of 2009, it said in a results statement.

Loan impairments slid to 6.55 billion pounds, compared with 13.4 billion last time around.

Market expectations had been for pre-tax profit of 858 million pounds and impairments of 6.73 billion, according to Dow Jones Newswires.

"The first half of 2010 was a significant milestone for Lloyds Banking Group as the group returned to profit," said chief executive Eric Daniels in the earnings release.

"Despite the challenging economic environment, the core businesses performed strongly and we continued to see positive momentum across all of the key income statement line items: income, margins, costs and impairments and an extension of the positive business trends established in 2009.

"Given the business model we have established, coupled with the gradual recovery in economic growth in the UK, we continue to believe that the group is well positioned to deliver a strong financial performance over the coming years."

LBG is 41-percent owned by the British government after a massive state bailout at the height of the global financial crisis.

The group was hobbled by its 2008 government-brokered takeover of Halifax Bank of Scotland (HBOS), which was saddled with high-risk investments in the property sector.

The pre-tax profit figure, meanwhile, strips out the cost of HBOS integration and other one-off items.

Lloyds added on Wednesday that net profits plunged to 596 million pounds in the first half of 2010, compared with 7.15 billion last year. The sharp drop was due to an 11.2-billion-pound gain on the purchase of HBOS.

The lender had already stated in April that it expected to return to profit in the first three months of 2010.

Investors applauded the first-half numbers, sending Lloyds' share price 1.24 percent higher to 72.94 pence in morning deals.

London's benchmark FTSE 100 index of leading shares was down 0.90 percent at 5,347.72 points.

© 2010 AFP

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