Lloyds returns to profit as bad loans decline

LLOYDS BANKING Group, the owner of Bank of Scotland (Ireland) and Halifax, has returned to profit for the first time since 2008 as bad loans declined.

The group, which decided earlier this year to close its retail operations in Ireland, said impairments in its Irish businesses were past their peak. The bank said the first quarter of the year was “very encouraging”.

Lloyds, 41 per cent owned by the British government, said in a trading statement that earnings were helped by lower provisions for non-performing loans than the bank had forecast.

The bank posted a pretax loss of £6.3 billion last year after bad loans surged following its purchase of Halifax Bank of Scotland (HBOS) at the peak of the financial crisis. The bank last reported a profit in the first half of 2008 before the HBOS acquisition.

“It is very, very pleasing to be able to return to profitability earlier than many of us had previously expected,” Lloyds finance director Tim Tookey said.

However, Lloyds added in its statement that it remained “vigilant to changes in economic conditions and to individual lending positions”, and that it would “continue to monitor the position of the Irish economy in particular”.

Analysts said it was possible that Lloyds’ positive comments on conditions in the Irish market would be replicated at Irish banks. (Additional reporting: Bloomberg)