Lloyds returns to profit to make £2.21bn
- 25 February 2011
- From the section Business
Lloyds Banking Group has returned to profit for the first time since it was bailed out by the government at the height of the financial crisis.
It saw a pre-tax profit of £2.21bn, compared with a £6.3bn loss in 2009.
A recovery in High Street banking offset rising bad debts in the Republic of Ireland, though its overall cost of bad loans fell from £24bn to £13bn.
The group had already revealed outgoing chief executive Eric Daniels would receive a £1.45m bonus.
Speaking to BBC business editor Robert Peston, Mr Daniels said he had not decided whether to take it.
Payment is deferred, he pointed out, and he would decide at a later date whether to accept it.
Mr Daniels said that 2010 had been an "important year, marking our return to profitability, and a further reduction in risk in our business".
"Our significant progress in the year has positioned the group well to become the best bank in the UK for all our stakeholders," he added.
The group added it had trimmed its bad debts thanks to the "slowly improving economic environment", but warned its problems in the Irish Republic had worsened in the last three months of the year, with bad loans hitting £4.3bn from £2.9bn in 2009.
It also cited Australia as a country that was presenting it with "specific economic challenges", because although economic performance had been "robust", property values outside the major cities were "particularly weak".
Lloyds shares fell around 4.5% on the news, although owing to a technical breakdown at the London Stock Exchange, morning share trading was blocked for several hours.
Lloyds, which is 41%-owned by the government, said its profit figures had been heavily adjusted to reflect the acquisition of HBOS - Halifax Bank of Scotland - in 2009 - a deal that was brokered by the then-Labour government.
The 2009 pre-tax loss figure of £6.3bn assumes Lloyds owned HBOS for the whole of the year, even though the merger happened part way through it.
Eric Daniels said he was highly satisfied with the figures.
"Clearly when you have a bank of this size and a troubled portfolio, as we inherited from HBOS, you're going to see some swings and roundabouts, but it was a very, very good year, and probably the most pleasing part was we also reduced risk while we were doing it.
"We repaid a lot of central bank funding last year, £61bn. We also announced this morning that we repaid a further £13bn, and we've reduced the balance sheet quite considerably. So all in, a very good set of results."
Chris Skinner, chairman of the Financial Services Club, told the BBC that the bank's performance had been good enough to justify Mr Daniels taking his bonus.
"I think he deserves it. He's been there since 2003. This was a shotgun marriage that they had to made happen and work.
"He's made it work. There's a new chief executive coming in in March, so as a recognition of his success he has been successful and should take the money."