Lloyds reports £1.6bn profit as impairments halve
by Gill Montia
Lloyds Banking Group has returned to profitability on a combined businesses basis, reporting pre-tax profit of £1.6 billion in the first half of 2010.
The result compares with a £3.9 billion loss in the same period of 2009.
The group saw a strong trading performance against the backdrop of a stabilising economy, reporting “good” revenue growth, lower costs and reduced provision for bad debts.
Total impairments were significantly lower than expected at £6.5 billion, compared with almost £13.4 billion in the first half of 2009.
Lloyds’ banking net interest margin improved to 2.08%, compared to 1.83% second half of 2009, and the group says it remains on track to deliver targeted balance sheet reductions of £200 billion.
In the first six months of the year, the 41% state-owned lender extended a gross £14.9 billion in new mortgages to UK homeowners and committed £23.7 billion in lending to UK businesses.
Looking ahead, Lloyds expects to deliver a strong medium-term performance as the UK economy recovers.
Commenting on the results, group chief executive, J Eric Daniels, says: “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.”