Lloyds returns to profit of £2.21bn

Lloyds Banking Group is back in the black for the first time since it was bailed out by the government at the height of the financial crisis.

It reported a pre-tax profit of £2.21bn, compared with a £6.3bn loss in 2009.

A recovery for High Street banking offset rising bad debts in the Republic of Ireland, though its overall cost of bad loans fell from £24bn to £13bn, the BBC reports.

Its asset management arm SWIP also reported a strong year, with profits before tax of £88m. Meanwhile, funds under management increased to £146.2bn from £141.7bn at the end of 2009.

Dean Buckley, managing director of SWIP, says: "SWIP's external gross new business for the year was £3.1bn. A key contributor to this was £1bn new business income in our Wholesale team - another record result for SWIP.

"During 2010 we completed the integration of the HBOS heritage assets which entailed the successful transfer of over 300 funds and circa £50bn of assets.

"We invested heavily in people and infrastructure which combined with our capabilities across equities, fixed income, real estate and multi manager, positions us well to deliver against our ambitious plans for future growth."

Lloyds outgoing chief executive Eric Daniels, who is set to receive a £1.45m bonus, said 2010 had been an "important year, marking our return to profitability, and a further reduction in risk in our business".

"Our significant progress in the year has positioned the group well to become the best bank in the UK for all our stakeholders," he added.

The group said it had trimmed its bad debts thanks to the "slowly improving economic environment". However, its problems in the Irish Republic had worsened in the last three months of the year, with bad loans hitting £4.3bn from £2.9bn in 2009.

Lloyds, which is 41%-owned by the government, said its profit figures had been heavily adjusted to reflect the acquisition of HBOS - Halifax Bank of Scotland - in 2009.