Lloyds suffers a £24bn hit on bad debts

Despite the hit Lloyds said it was "absolutely committed" to Halifax, which is now seen as one of three core sites alongside London and Edinburgh. Most of the losses were incurred at Bank of Scotland's commercial real estate arm.

Lloyds' head of banking Helen Weir said Halifax is key to Lloyds' future growth.

"We are absolutely committed to Halifax. I've been very impressed with the quality of staff there," she said. "They are very loyal, they are high calibre and we've seen a reasonably low level of staff turnover."

Lloyds made 11,500 people redundant across the group last year, but Halifax has been one of the least affected areas. Ms Weir said this was expected to continue this year.

Lloyds' target is to integrate the Halifax Bank of Scotland (HBOS) businesses by the end of 2011.

More job losses are expected across the group this year as Lloyds hopes to raise its annual cost savings target to 2bn by the end of 2011, but the group refused to give further details.

Shares in Lloyds fell 4.4 per cent last night, a fall of 2.4p to 52.5p, partly on worries over the group's Irish business where one in three loans are now impaired.

Lloyds, 41 per cent owned by the taxpayer, said impairment charges shot up by more than 9bn last year after the takeover of struggling rival HBOS.

Lloyds' chief executive Eric Daniels has already announced he will give up a 2.3m bonus to stave off another row over bank pay, but the bank confirmed it would pay a "very small percentage of revenues" to bank staff.

It is expected to hand out 200m in bonuses. This is far less than the 1.6bn at RBS as Lloyds does not have a large investment banking business.

Following RBS's confirmation that more than 100 investment bankers will receive a bonus of over 1m each, Lloyds said the number of people receiving million pound bonuses would be much less than this.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said Lloyds is still paying the price for the HBOS deal at the height of the financial crisis.

"The HBOS legacy still weighs heavily on Lloyds, although these numbers do show some signs of encouragement," he said.

Lloyds said that the worst of the impairments for toxic loans and struggling borrowers is now behind it. Second half bad debts eased by 21 per cent and the group said impairment charges have now peaked, with a significant reduction expected in 2010.

It said that with signs of stabilisation in the wider economy, a significant improvement is expected across Lloyds this year.

There was no news on plans to sell off 600 branches to meet conditions imposed by the European Commission in return for public support.

Mr Daniels said the priority has been on improving the group's balance sheet and completing the HBOS integration.

The 600 branches up for sale include the TSB brand, Cheltenham & Gloucester, Lloyds TSB's branches in Scotland and some in England and Wales. They represents around a fifth of its UK network. Possible bidders include Yorkshire Bank's parent company National Australia Bank.

Lloyds has already disposed of five non-core businesses including online insurer esure, since last summer,

The bank sees a slow recovery for the UK economy in 2010, with house prices expected to be broadly flat and its own retail banking margins improving in 2010 and beyond.

It is targeting two per cent growth this year as pricing increases begin to feed through.

The cost of the takeover

The UK superbank formed from Lloyds' takeover of Halifax Bank of Scotland has endured a rocky ride since its creation a year ago.

The deal – backed by Gordon Brown at the height of the credit crisis to stave off the nationalisation of ailing HBOS – created a giant with 3,000 branches, 22 million current accounts and 27 per cent of gross mortgage lending.

Lloyds believed the takeover was a good long-term bet, but the toxic baggage brought by HBOS's reckless lending and the impact of recession on its loan book has seen the Government take a 41 per cent stake – initially pumping in 17bn.