LLOYDS Banking Group roared out of the red over the first three months of the year as provisions for bad debts fell, raising market expectations that the group will post a profit at the end of the year.
Consensus analyst forecasts before yesterday’s first-quarter results were for Lloyds to report a small loss of almost £200m for the full year 2010, after the bank lost £6.3bn in 2009 due to heavy loan writeoffs in the wake of its takeover of HBOS.
But expectations were yesterday widely upped for Lloyds to remain in profit over the full year, after it moved into the black in the first quarter.
Chief executive Eric Daniels said the group expects the profitable momentum to be sustained throughout 2010, adding: “Impairments have slowed significantly in the first few months of the year giving us confidence that we will achieve a better financial performance than previously guided.”
Lloyds, which is 41 per cent owned by the taxpayer, said it had seen significantly lower impairments in its wholesale division, while bad debts in the retail portfolios also fell. However, it said impairments in the international division continue at a high level, mainly due to further provisions relating to the commercial real estate portfolio in crisis-hit Ireland.
“We remain vigilant to changes in economic conditions and to individual lending positions and continue to monitor the position of the Irish economy in particular,” the group said.
It said customer deposits had grown over the period, though lending balances remained flat. Lloyds expects to deliver £2bn-worth of cost savings from its acquisition of HBOS by the end of 2011.