Lloyds: Back to black
Hold the front page: big bank says it's going to make a profit.
Yes, it has come to this.
A few years ago, there was widespread concern that banks were making excessive profits. Then the worst banking crisis since the 1930s meant we worried whether the likes of Royal Bank of Scotland and Lloyds would ever make a profit again.
And today - let's declare it a national holiday - Lloyds has said it will make a profit in 2010, which is the first time it has said it expects to be in the black since its troubles arrived by the trainload in wagons marked "HBOS".
What will be the scale of the turnaround?
Well its accounts have become very confusing because of the impact of its controversial takeover of HBOS and assorted one-off factors.
But it says that on a "combined" (Lloyds plus HBOS) basis, pre-tax losses were £6.7bn in 2008 and £6.3bn last year.
So a profit in 2010 would be an improvement of many billions of pounds. I would imagine that analysts will shoot for something of the order of £1bn or so of profit for 2010.
Which sounds like a lot of money. But that is many billions less than it will end up generating, as and when the losses it incurs on the loans it has made fall to more normal levels.
So what's driving the recovery?
Well most important is that losses on those reckless loans it provided to companies and households during the bubble years are falling quite significantly.
In its results announced at the end of February, it disclosed a charge of £24bn for loans going bad.
This was a mindboggling sum to lose as a consequence of borrowers being unable to keep up the payments.
But the rate of loss was at least falling as 2009 progressed. In the first half of 2009, the so-called impairment charge was £13.4bn; in the second six months, it was £10.6bn.
What Lloyds said in those last results is that it expected the impairment-charge improvement rate of just over 20% every six months to be sustained into 2010 (forgive that horrid construction). But it now believes that losses on bad debts will shrink faster.
There are two other contributors to Lloyds return to the oh-so-attractive black.
First, and as Lloyds staff anxious about losing their jobs know only too well, the bank is proving adept at generating cost reductions from its takeover of HBOS.
It had expected cost savings on an annual basis to be £1.5bn by 2011. Lloyds now expects those annual cost reductions to be £2bn (although Lloyds is paying more than expected in reorganisation charges to secure those efficiency improvements).
And then there's what it can squeeze from customers. It has been able to push up the interest rate on mortgages and other loans a bit. So its margin is expected to widen fairly significantly this year, from 1.77% to 2%.
If you are a borrower from Lloyds, you probably therefore won't take the view that its recovery is good news for everyone.
That said, a successful economy requires banks that make profits.
However we also need banks that can finance themselves from commercial sources, rather than borrowing from taxpayers. And £157bn of Lloyds' funding comes in various ways from taxpayer supported schemes, both in the UK and elsewhere.
It has a plan to wean itself off that public-sector drip by reducing the loans and investments on its books.
Whether it can shrink enough without damaging the British economy (by depriving households and businesses of valuable loans) is the big unanswered question.