Lloyds sees profits plunge

Part-nationalised Lloyds Banking Group today insisted that its EU-imposed sale of 632 branches was on track as it unveiled a huge loss in the first half of the year.





Lloyds, which is 40.2% state-owned, reported a £3.3 billion pre-tax loss in the six months to June, compared to a £1.3 billion profit last year, as the cost of the payment protection insurance (PPI) scandal took its toll.



The UK's biggest lender, which owns Halifax, Bank of Scotland and Cheltenham and Gloucester, set aside £3.2 billion to cover compensation for customers who were mis-sold PPI.



Lloyds is being forced by the EU to sell branches in return for the £20 billion in state aid it received following the 2008 credit crisis.



Chief executive Antonio Horta-Osorio refused to confirm the number of organisations who have approached the bank over the sale process after reports suggested interest had been disappointing.



He said: "We can confirm we have had a number of credible approaches and they have been in line with our expectations."



He added: "We are confident we will find a buyer."



Lloyds is understood to be in talks with six parties, of which only two - new bank venture NBNK and Co-Op Bank - have made formal expressions.



Stripping out the provision set aside for customers mis-sold PPI, the bank saw underlying profits plunge 31% to £1.1 billion as it struggled with the "subdued" economic climate.



Mr Horta Osorio, who announced 15,000 job losses in his vision for the business in June, said the performance was "resilient" despite the economic challenges and regulatory uncertainty.



But at less than 40p - a two-year low - the bank's share price price is a long way off from the 63p at which the Government would break even if it was to sell its stake.



The group slashed its dependence on emergency funding from central banks and governments - notably the Bank of England and HM Treasury - by £60 billion in the period - with the total standing at £37 billion.



Lloyds reduced its bad debt losses by 17% to £5.4 billion as improvements in its wholesale division offset a deterioration overseas, most significantly in Ireland, where the property market continues to fall.



The impairment charge for Ireland increased to £1.8 billion in the period, from £1.6 billion last year. A further 11% of the £27.6 billion loans in Ireland became impaired, resulting in 64% of the portfolio now being impaired.



The Group also took a charge of £70 million in the first half of this year as a result of losses arising from the earthquake in New Zealand.



But the bank said it still expects further reductions in bad debt losses in 2011 compared to last year.



The decline in underlying profits is partly down to a decline in net interest margins - the gap between what a bank charges for loans and what it pays to borrow - from 2.12% to 2.07%.



Lloyds said it was on track to meet its full year target for the Project Merlin agreement with the Government, after it extended £21.2 billion of gross lending to businesses in the period, including £6.7 billion for small businesses.



Shares were down more than 4% after today's results were published.



Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "The foundations for the longer term aim of a more agile and efficient organisation are slowly being put in place, and the company's dominance in savings and mortgages in the UK provide support."

PA

Arts and Entertainment
Banksy's 'The Girl with the Pierced Eardrum' in Bristol
art'Girl with the Pierced Eardrum' followed hoax reports artist had been arrested and unveiled
News
Pistorius leaves Pretoria High Court to be taken to prison
news

Voices
Stephanie first after her public appearance as a woman at Rad Fest 2014
voices

Life and Style
tech

Board creates magnetic field to achieve lift

PROMOTED VIDEO
Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

News
news

Endangered species spotted in a creek in the Qinling mountains

Life and Style
tech

Company says data is only collected under 'temporary' identities that are discarded every 15 minutes

News
peopleJust weeks after he created dress for Alamuddin-Clooney wedding
Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010
films

George Lucas criticises the major Hollywood film studios

News
ebooksAn unforgettable anthology of contemporary reportage
Sport
football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Life and Style
health

Some experiencing postnatal depression don't realise there is a problem. What can be done?

Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
News
i100
Sport
Adel Taraabt in action for QPR against West Ham earlier this month
footballQPR boss says midfielder is 'not fit to play football'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album