Part-nationalised lender Lloyds Banking Group today posted a first-half loss of £3.1 billion pounds sterling as HBOS’s reckless lending took its toll.
The bank, which is 43 per cent owned by the British government, said impairments on bad debt rose “significantly” to £13.4 billion, largely due to HBOS.
Due to complex accounting changes, Lloyds posted a statutory £6 billion pre-tax profit today. Lloyds said HBOS’s assets accounted for 80 per cent of the impairments.
The bank said the fall in property prices over the first six months of the year had a significant effect on the group’s results because of the large amount of related loans at HBOS.
It said more conservative assessments of HBOS’s commercial property assets meant impairments, which were up from £2.5 billion in 2008, should peak in the first half of the year.
Group chief executive Eric Daniels said: “Our first half loss was driven by the high levels of impairment.
“The core business delivered a resilient performance, despite the weak economy.
“We are successfully managing the short-term issues and are well positioned to outperform over the medium term, providing value to our customers and shareholders.”