27 Feb 2010

Bad debts knock Lloyds

8:01 am on 27 February 2010

Lloyds Banking Group has announced it lost 24 billion pounds on bad loans in 2009, forcing the bank heavily into the red.

The bank posted an operating loss of 6.3 billion pounds - compared to a loss of 6.7 billion pounds in 2008.

On a pre-tax profit basis, the group made a profit of 1 billion pounds.

The bank blamed the massive losses on commercial property loans made by Halifax Bank of Scotland, which it took over at the start of last year.

Lloyds shares had lost more than 5% by mid-afternoon trading on Friday.

Despite the loss, the bank said total income rose by 12%, to 23.9 billion, while costs fell by 5%.

Lloyds took over Halifax Bank of Scotland in January last year. It underestimated how many bad loans HBOS had on its books, and had to be bailed out by the government as a result.

The bank is now 41%-owned by the state, down from 43% after it raised 22.5 billion pounds in capital at the end of last year.

Lloyds also lost large sums on commercial property loans in Ireland and Australia.