Lloyds set to return to profit in 2010

Lloyds Banking Group is expecting to make a profit in 2010 after making losses of £6.3bn last year.

In an unscheduled market update this morning, the bank says: "Based on the group's current economic and regulatory assumptions which remain unchanged since our recent 2009 preliminary results announcement, the group believes that it will be profitable on a combined businesses basis in 2010."

Just last month, the bank revealed it has made a £6.3bn operating loss in 2009, though this was slightly down from the £6.7bn loss it reported in 2008.

In today's announcment the group also says trading has been strong for the first ten weeks of the year. In addition, costs have remain controlled and are lower than the equivalent period in 2009. Impairment provisions are also lower than anticipated, the group says.

Lloyds' shares had advanced 7.83% to 59.9p at 9.20am GMT, making it the biggest winner on the FTSE 100. The news also boosted other stocks in the sector. RBS rose 5.76% to 44.42p, while Barclays was up 1.77% to 359.15p.