Compensating customers who were mis-sold insurance pushed Lloyds £3.25bn into the red in the first half but the loss was broadly as expected and the bank reiterated its full-year guidance.
The banks shares fell by more than five per cent after the announcement.
Excluding the £3.2bn Lloyds had already earmarked to cover mis-selling liabilities, the bank's adjusted pre-tax profit was £1.1bn, down from £1.6bn reported a year earlier.
That was broadly in line with the £1bn figure expected by analysts.
"Our guidance given in our Strategic Review announcement on 30 June 2011 remains unchanged," the company said in a statement.
"We continue to monitor economic conditions closely, notably in the UK and Eurozone."
Lloyds, 41-per cent owned by the British government after a credit crisis bailout, said it had cut impairment charges on bad loans by 17 per cent to £5.4bn although its Wealth & International unit reported a £2.1bn loss, primarily due to higher impairment charges in Ireland.