Lloyds Banking Group on Friday reported a £6.3bn ($9.6bn) underlying pre-tax loss for 2009, a slight improvement on the £6.7bn deficit recorded a year earlier.

Impairment charges were 61 per cent higher than in 2008 at £24bn, but the partly state-owned lender repeated its belief that these bad loan losses had peaked in the first half of 2009.

It also increased its forecast for the cost benefits expected from the acquisition of HBOS, the rival lender, last year. The group said it now expected £2bn of annualised cost savings by the end of 2011, having previously targeted savings in excess of £1.5bn.

Shares in the group, which carried out a £13.5bn rights issue last year, fell 2.2 per cent to 53.71p in early morning trading on Friday.

Lloyds is the third big British bank to report its 2009 results, following Royal Bank of Scotland, which reported a smaller net loss on Thursday, and Barclays, which published strong figures on February 16. HSBC releases its results on Monday.

Lloyds’ underlying income net of insurance claims rose 12 per cent to £24bn but this revenue performance was flattered by lower writedowns on treasury assets and profits from debt swaps.

Net interest income — the net revenue coming in from the bank’s lending activities — actually fell 15 per cent to £12.7bn, reflecting the impact of falling base rates and higher wholesale funding costs.

Lloyds blamed the steep rise in impairment charges on problematic commercial property loans extended by HBOS while it was still independent. However, it said impairment charges fell 21 per cent in the second half of the year.

“We expect to see a similar pace of half-yearly improvement throughout 2010, with further substantial reductions in 2011 and beyond,” the bank said.

Predicting a “weak upturn” for the UK economy in 2010, Lloyds suggested that the risk of a severe further downturn this year had decreased in recent months. Company failures would peak during the year but would not be as high as they had been during the recession, it added.

The underlying figures reported by Lloyds assume for purposes of comparison that the bank owned HBOS throughout 2008 and 2009.

They also exclude various items such as the artificial £11.2bn “negative goodwill” gain Lloyds made on the acquisition of HBOS and the £2.5bn it was charged when it chose not to enter formally the government’s toxic asset insurance scheme.

On a statutory basis, the bank posted a pre-tax profit of £1bn, up from £760m, while income net of insurance claims more than doubled to £23.2bn. www.ft.com

Posted by Shayne Heffernan on Feb 27th, 2010and filed underEurope, Latest News, News & Events.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site