Part-nationalised bank Lloyds said this morning that the group returned to profitability on a combined businesses basis in the half-year to end-June, with profit before tax of £1.603bn (H1 2009: £3.957bn loss).
Statutory profit before tax was £1.296bn (H1 2009: £5.95bn which included the £11.173bn gain on acquisition of HBOS).
Lloyds reported robust gross lending with the Group extending £14.9bn of gross new mortgages to UK homeowners and £23.7bn of committed gross lending to UK businesses.
The Group said it delivered good revenue growth, lower costs and a significant reduction in impairment whilst continuing to build customer franchises. The cost:income ratio also saw further improvement to 43.5%.
Total income, net of insurance claims, increased by 5% to £12.481bn which included a gain of £423m (H1 2009: £745m) as a result of the Group's liability management transactions. Excluding the impact of liability management transactions income was 8% higher.
Banking net interest margin improved to 2.08% in the first half of the year, compared to 1.72% in the first half of 2009 and 1.83% in the second half of 2009, as higher asset pricing and compression of the spread between base rate and LIBOR more than offset the impact of lower overall deposit margins.
Integration was ahead of schedule and Lloyds remains on track to deliver a £2bn synergy run-rate by the end of 2011. Increased annualised run-rate savings of c£1.3bn are expected by the end of 2010.
Total impairments were significantly lower than originally envisaged at £6.554bn (H1 2009: £13.399bn).
Balance sheet reduction plans are on track. In the first half of 2010 Lloyds achieved further reductions of £23bn and remains on track to deliver the targeted balance sheet reductions of £200bn.
Core tier one capital improved to 9%.
The group said it expects to deliver strong medium-term performance as the UK economy sees a gradual recovery.
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