Lloyds "to return to profit" says Daniels

LLOYDS Banking Group has predicted that it will return to profit this year in a trading update.

The lender – which is 41 per cent owned by the taxpayer – made an operating loss of £6.3bn loss last year but has started this year strongly.

It said in a statement: "In the first 10 weeks of 2010, the Group's trading performance has been strong and we are pleased with the Group's performance against each area of recent guidance.

“Overall, based on the group's current economic and regulatory assumptions which remain unchanged since our recent 2009 preliminary results announcement, the group believes that it will be profitable on a combined businesses basis in 2010."

Lloyds was badly hit after being saddled with bad loans by HBOS, which Llloyds bought at the start of last year.

The statement said group chief executive Eric Daniels will present the trading update to investors at the Morgan Stanley European Financials Conference.