Lloyds back to profitability after reduction in loan losses

LLOYDS Banking Group has said it will continue to monitor the Irish market even though a reduction in loan losses has helped it return to profitability.

Lloyds – in which the British government owns a 41% stake, as a result of Britain’s bank bailout – owns Bank of Scotland (Ireland). It said loan impairment charges (the amount put aside to cover bad/unpaid loans) in its Wealth and International division continue at a high level, “principally as a result of further provisions in Ireland relating to our commercial real estate portfolio”.

However, impairments relating to Lloyds’ Irish business were lower in the first three months of 2010 than they were in the final quarter of last year.

The group said in its latest interim management statement: “We continue to believe that we are past the peak for impairment losses in the division. We remain vigilant to changes in economic conditions and to individual lending positions and continue to monitor the position of the Irish economy in particular.”

On a group-wide basis, Lloyds said an overall lessening in bad loan charges helped the business return to profit in the first quarter of this year and should play a part in an overall profit for 2010. This would be a major turnaround from the loss of over €6 billion made last year.

Meanwhile, the group’s retail banking operation in Ireland, Halifax Ireland, will begin its wind-down in June, with the first closures of the 44 retail branches taking place on June 18, followed by more closures five days later.

Certain products, such as credit cards and current accounts, will close with the branches. But mortgages will remain until maturity, under Bank of Scotland (Ireland) management.

Some 750 people will lose their jobs as a result of the decision to close the Irish division of Halifax.