Thursday, 24 February 2011

UPDATE 2-Lloyds swings back to profit despite Irish hit

LONDON, Feb 25 (Reuters) - Part-nationalised British bank Lloyds (LLOY.L: Quote) swung back into profit last year after a recovery in its core UK retail banking operations absorbed a 4 billion-pound ($6.5 billion) hit on bad debts in Ireland.
Lloyds, Europe's fifth biggest bank by market value, made a pretax profit of 2.2 billion pounds ($3.6 billion), 300 million pounds ahead of the average market forecast, having lost 6.3 billion pounds in 2009.
Losses on bad loans fell 45 percent to 13.2 billion pounds thanks to a "slowly improving economic environment", but the bank said that improvement had been capped by its problems in Ireland, which worsened in the last quarter of the year.
"While we were disappointed by the increases in the international portfolios, these reflect specific economic challenges facing Ireland, and to some degree Australia, which we are managing closely," the company said.
In Ireland, where voters are today expected to punish the ruling Fianna Fail party for its handling of the financial crisis, bad loans rocketed to 4.3 billion pounds from 2.9 billion in 2009.
Lloyds is 41 percent owned by the UK government after being bailed out during the credit crisis when it was saddled with billions of pounds of losses from its takeover of troubled rival HBOS in 2008, a deal brokered by the Labour government of the time. Its shares closed up 0.4 percent at 65.78 pence on Thursday. ($1=.6205 Pounds) (Reporting by Sudip Kar-Gupta and Steve Slater; Editing by Paul Hoskins, Greg Mahlich)


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