British bank Lloyds returns to profit in first quarter

Britain's bailed-out Lloyds Banking Group said yesterday that it returned to profit in the first quarter and would remain profitable for the year as provisions against bad loans fell.

"In the first quarter of 2010 the group returned to profitability on a combined businesses basis due mainly to a significant slowing of impairments in the wholesale business," LBG said in a statement.

Lloyds, which is 41.3 per cent owned by the government after a huge bailout, had predicted last month that it would return to profit in 2010.

"The group is continuing to see positive trends in line with our recent trading update," chief executive officer Eric Daniels said in the statement.

"In particular, (loan) impairments have slowed significantly in the first few months of the year giving us confidence that we will achieve a better financial performance than previously guided.

"I am pleased to report that we returned to profitability in the first quarter and expect this momentum to be sustained throughout 2010."

The state took a large stake in LBG after a massive bailout following last year's government-brokered takeover of Halifax Bank of Scotland (HBOS), which was saddled with high-risk investments in the property sector.

Investors welcomed yesterday's news, sending Lloyds' share price 2.11 per cent higher to 71.72 pence in late morning deals.

London's benchmark FTSE 100 index of leading shares was down 0.51 per cent at 5,724.30 points.

"The return to profitability in the first quarter of this year provides a long overdue boost to the beleaguered bank," said equities analyst Richard Hunter at Hargreaves Lansdown Stockbrokers.

"In particular, the reduction in impairments represents a significant relief to the economic challenges which Lloyds has been facing."