Lloyds under attack despite return to profit

Eric Daniels, the chief executive of Lloyds Banking Group, will quit the role next week with a £1.45m bonus having steered his company firmly back into profit in 2010.

Mr Daniels is due to hand over the chief executive's office to Antonio Horta-Osorio, formerly the boss of Santander in the UK, on Tuesday, though he will stay on in a consultancy role. Yesterday, he said Lloyds had "achieved a step change in our financial performance" during 2010, as he unveiled pre-tax profits of £2.2bn for the full year, compared to a loss of £6.3bn in 2009.

The outgoing Lloyds boss also insisted he had no regrets about the takeover of HBOS, agreed at the height of the credit crisis in 2008, despite the huge impairment charges to which the acquisition exposed it.

However, despite the strong headline profits, anxiety about the small print of Lloyds' results continued to dog the bank yesterday, with its shares falling by more than 4 per cent – making it the worst performer in the FTSE 100 Index.

While bad debt charges fell 45 per cent to £13.2bn last year, analysts noted there had been a serious deterioration during the second half of the year, with Irish losses rising sharply.

Moreover, the £2.2bn pre-tax profit figure excludes the £500m provision Lloyds announced last week for customers badly advised on Halifax mortgages, as well as £1.7bn of integration costs and further accounting adjustments of more than £1bn. Though these were partially offset by a pension accounting gain, the Bank's statutory profit was just £281m. A £320m loss was attributable to shareholders.

Concern also remains over Lloyds' funding, with banks under pressure to repay the emergency support advanced by the Bank of England and other authorities during the financial crisis. Some £61bn was paid back last year, Lloyds said, plus another £13bn in the first two months of this year, but it still has to return more than £80bn by the end of 2012, which is likely to put a strain on its abilities to lend.

Ian Gordon, an analyst at Exane, said the cost of the HBOS deal, from which so many of Lloyds' problems stemmed, was still being felt. "The true horrors of the acquisition can never be unwound," he warned.

There was also fresh criticism of Mr Daniels's bonus, though it will be paid in shares that cannot be cashed in for at least three years. Only then will the Lloyds boss decide whether or not to accept the money, he said.

David Fleming, a senior official at the trade union Unite, said the payment was insensitive in the context of the job-loss programme Mr Daniels has presided over since the HBOS takeover. "The greedy Lloyds bosses have sacked over 21,000 of their staff and awarded their outgoing bosses £1.45m in bonuses," he said.

Despite the concerns, however, Mr Daniels said he was proud to have restored the bank to financial health and that it had been an "honour and a privilege" to serve as chief executive.

"We achieved a step change in our financial performance despite modest economic growth, returning the group to profitability, while absorbing the substantial costs of reducing risk in the business," he said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'