Lloyds posts 4 bn pounds loss in H1 '09

Lloyds Banking Group has reported a huge loss of 4 billion pounds for the first six months of 2009, as mounting impairment charges took a severe toll on its bottom line.

The entity, in which the British government now owns more than 40 per cent stake, had a profit of 2.8 billion pounds in the same period a year ago, it said in a statement today.

Battling the financial meltdown, impairment charges soared to 13.4 billion pounds, primarily due to the legacy loans of HBOS. The firm was acquired by Lloyds in January this year.

The charges have ballooned by 10.9 billion pounds as compared to the same period a year ago. "Around 80 per cent of the first half charge was associated with legacy HBOS's loans, the majority of which are outside the traditional Lloyds low-risk appetite," the statement noted.

 

Noting that the economy is expected to stabilise in the second half of this year, Lloyds said that its results are anticipated to improve during the same period.

"While the environment will remain challenging, management expects the economy to stabilise in the second half and start recovering slowly in 2010.

"...With impairments anticipated to have peaked in the half, management expects the Group's results to improve in the second half and through 2010," Lloyds noted.

According to the entity, impairments in the second half of 2009 are expected to be significantly lower than the first half with progressive reductions thereafter.

"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," Lloyds Group Chief Executive J Eric Daniels said.

The banking group, as previously announced, expects to incur a loss before tax for 2009, excluding acquisition related negative goodwill gain.