Lloyds Banking Group Back In Half-Year Profit

Part-nationalised Lloyds Banking Group says it has returned to half-year profit for the first time in three years - making £2.1bn.

The bank, which is 39% owned by the Government following its bailout during the financial crisis, said it delivered a "significantly improved financial performance."

It was on that basis that the Chancellor confirmed in June the Government's intention to examine ways of off-loading the taxpayer's stake though Lloyds continues to be haunted by the mistakes of its past.

In addition to its core results this morning, it also confirmed an additional £500m provision to cover the costs of the Payment Protection Insurance (PPI) mis-selling scandal which has so far resulted in a writedown totaling £7.3bn.

The bank said costs in the first half relating to PPI were higher than it had anticipated and the extra provision included £50m for possible regulatory enforcement action.

Lloyds is slowly clawing back its value in the wake of the financial crisis

But Lloyds insisted its recovery was ahead of plan, with today's profits following losses of £456m a year earlier.

It said the marked improvement was down to further cost reductions and a 43% plunge in bad debts to £1.8bn in the six months to June 30.

Chief executive Antonio Horta-Osorio said the flotation of TSB Bank - a result of the Co-op pulling out of a deal to buy 632 branches from Lloyds - was on track for mid-2014.

Shares in Lloyds Banking Group opened 6% higher at 72p each.

The recent recovery in its value has been one reason the Government is keen to move forward with privatisation plans though Mr Horta-Osorio said today that while he had put the bank in a position for a share sale to start, the decision on timing was up to the Government.

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