Group profits came to £174m in the first six months of the year, down 34 per cent on the £264m recorded in the same period of 2011.
The group also blamed intense competition in the supermarket businesses, which hit its retail sales.
Continuing PPI provisions meant revenues fell 1.1 per cent, while underlying profits in the bank fell 67.9 per cent to £36.9m.
The bank is in the process of purchasing 632 Lloyds branches for up to £750m, expanding its network to almost 1,000 branches and 11m customers – a move that may take time to yield returns as the businesses are integrated.
Group chief executive Peter Marks blamed the recession for much of the fall in profits.
“The impact has been felt most keenly in our bank which has been hit by increased impairments on lending to corporate customers and the on-going low-interest-rate environment,” he explained.
The group’s funeral business saw profits rise 6.6 per cent to £36m and the pharmaceuticals division’s profits jump 27.2 per cent to £16.1m.
But food sales fell 1.2 per cent on a like-for-like basis and operating profits fell 16.4 per cent to £119m, with the firm blaming strong competition in the sector.