The part nationalised Lloyds reported an underlying profit of £2.2 billion after provisions for bad loans nearly halved although bad loans in its Irish operations jumped to £4.3 billion in 2010 from £2.9 billion in 2009.
The current chief executive, Mr. Eric Daniels, who will step down in March said the Irish market will remain difficult in 2011, although he expects bad loans to improve.
“The Irish economy remains at very low levels. We view them as sort of bouncing along the bottom, not getting worse but certainly not improving. We would expect for 2011 that we’re going to see very modest growth”, he said.
Lloyds is the second biggest bank in the UK, behind HSBC and the fifth largest bank in Europe.
Lloyds pre-tax profit of £2.2 billion, although £300 million ahead of analysts’ forecasts and compares favourably against a loss of £6.3 billion in 2009, pales against a profit of £6 billion reported by Barclays.
Although the bank’s overall losses from bad loans stood at £13.2 billion, a reduction of 45% over 2009 because of “slowly improving economic environment”, its Irish losses mounted in 2010, especially in the last quarter.
The banks net interest margin – the difference between its lending rates and cost of funding, improved marginally to 2.1 percent in 2010 from 1.77 percent in 2009. However, the bank said it does not expect margins to improve further in 2011.