LLOYDS Banking Group forecast another tough year ahead as it slumped to a £3.5bn annual loss.
Lloyds, 40 per cent owned by the state, warned the economy remains “uncertain” and its chief executive António Horta-Osório admitted he does not know when the taxpayer will get its money back.
The UK’s biggest mortgage lender said it expects the economy to weaken further in the first half of 2012, followed by “relatively modest” recovery later this year.
“Our main goal is to give the Government the opportunity to (get) taxpayers’ money back,” said chief executive António Horta-Osório. “For that we have to bring the bank back to profitability.” However, he declined to say when this will be.
But the group insisted it is in much better shape than a year earlier, thanks in part to its reinvigoration of the Halifax brand.
The group grew customer deposits five per cent, as a savers prize draw at Halifax lured new customers.
“It (Halifax) is going really well and it’s really important,” said Alison Brittain, head of Lloyds’s retail arm. “It feels now like it’s a very strong brand.”
However, the retail division reported a nine per cent fall in pre-tax profits to £3.6bn, due to higher funding costs and “muted” demand for loans.
Lloyds’ hefty losses compared with profits of £281m in 2010 and were in part down to £3.2bn set aside to repay customers mis-sold payment protection insurance.
The bank’s income shrunk 10 per cent to £21bn, as it was faced by weak demand for loans and customers continuing to pay down debt.
Lloyds warned income is likely to fall further this year as the tough economy continues to bite.
It forecasts rising unemployment, flat house prices and interest rates staying low for longer.
The group, which bought Halifax Bank of Scotland in 2009, said its integration is now largely complete, and the bank is now on the “simplify” stage.
After cutting 28,000 jobs during the integration, Lloyds last year announced the next wave is likely to cost another 15,000 jobs. Some 3,700 of these have already been announced. Integration director Mark Fisher said: “Integration is to all intents and purposes finished.”