TRADING in Lloyds shares had to be suspended for a five-minute time out yesterday as its stock plunged more than 10 per cent in a few minutes.
The sell-off came after it revealed that it had dropped back into the red, booking a £3.3bn loss for the first half of this year.
Investors’ fears were stoked by a worsening of its Irish loan book, which saw impairments rise 14 per cent to £1.8bn.
The bank warned that the improvements in its Irish portfolio would be gradual but emphasised that overall, impairments dropped 17 per cent to £5.4bn.
At a results presentation overshadowed by the bleak market mood, the bank’s chief António Horta-Osório said that the Eurozone needs to seriously pursue further integration in order to halt growing panic.
“It’s not easy when you have coordinated monetary policy and no coordinated fiscal policy,” he said. “You have 17 countries around the table. You will have to have a significantly more coordinated fiscal policy going forwards.”
The bank added that it has dramatically cut its exposure to the region’s banks from £2.7bn at the end of last year to £620m by the end of the first half.
It also boosted gross lending to small businesses (SMEs) by £6.8bn, equating to a two per cent increase in net lending.
However, Lloyds has also seen margins contract to two per cent from 2.17 per cent during the last six months, which it blamed on “continued high funding costs, repayment of government and central bank facilities, and competitive deposit markets”.
The bank repaid nearly £60bn in government funding over the period and issued £25bn of debt.