Lloyds’ success in cutting down on bad debts

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Analysts are bearish on Lloyds Banking Group’s outlook as it is closely tied to the economy.

Nic Clarke, at Charles Stanley, said the group “made progress during 2011 de-risking the bank by shrinking the size of its non-core assets and improving its funding position”.

But he added: “LBG remains a geared play on the UK economy and like the bank’s management we believe the economic environment will remain challenging in 2012 and therefore our (hold) recommendation on the stock remains.”

Hargreaves Lansdown analyst Richard Hunter said: “The outlook comments provide little reassurance, with the company predicting a similarly tough year as they continue to concentrate on tidying up the balance sheet.”