Part-nationalised bank Lloyds returns to profit

Part-nationalised Lloyds Banking Group has confirmed it returned to profit in the first three months of the year after a marked slowdown in bad debts.

The bank, which is 41 per cent owned by the taxpayer, said it expects to sustain the "momentum" throughout 2010 and report profits at both the half year and full-year stage.

Its first quarter performance marks a significant turnaround on the £6.3 billion losses reported for 2009 after the HBOS takeover and financial crisis left Lloyds with a colossal £24 billion in bad debts.

Lloyds said it saw a significant slowdown in the level of bad debt charges as improving economic conditions help borrowers on to a firmer footing.

But the first-quarter return to profitability came mainly as a result of a better-than-expected improvement in impairment charges in the wholesale business, according to the group.

Eric Daniels, group chief executive of Lloyds, said: "I am pleased to report that we returned to profitability in the first quarter and expect this momentum to be sustained throughout 2010."