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| Lloyds blames HBOS for £4bn loss | Lloyds blames HBOS for £4bn loss |
| (40 minutes later) | |
| Lloyds Banking Group says it has made a loss in the first half of the year, due to mounting bad debts at HBOS, which it took over in January. | Lloyds Banking Group says it has made a loss in the first half of the year, due to mounting bad debts at HBOS, which it took over in January. |
| The group made a loss of £4bn in the first six months of 2009 after writing down the value of assets that are now worth less than previously thought. | The group made a loss of £4bn in the first six months of 2009 after writing down the value of assets that are now worth less than previously thought. |
| The 43% state-owned bank took a charge of £13.4bn, mainly for bad loans, 80% of which came from HBOS. | The 43% state-owned bank took a charge of £13.4bn, mainly for bad loans, 80% of which came from HBOS. |
| But it said it expected its results to start to improve in the coming months. | But it said it expected its results to start to improve in the coming months. |
| BBC business editor Robert Peston said the results bore witness to the quite astonishing risks taken by HBOS. | BBC business editor Robert Peston said the results bore witness to the quite astonishing risks taken by HBOS. |
| This is an old fashioned failure to kick the tyres properly when lending to hotel groups, property developers and investors who in the 1950s would have been called spivs Robert Peston, BBC business editor Read Robert Peston's blog | This is an old fashioned failure to kick the tyres properly when lending to hotel groups, property developers and investors who in the 1950s would have been called spivs Robert Peston, BBC business editor Read Robert Peston's blog |
| He added that the better news for Lloyds shareholders was that most of these poor quality loans were now being insured by taxpayers, so that future losses would be borne by the taxpayer, not the banks. | He added that the better news for Lloyds shareholders was that most of these poor quality loans were now being insured by taxpayers, so that future losses would be borne by the taxpayer, not the banks. |
| Lloyds said it was in talks with the government about the insurance scheme, which is known as the Asset Protection Scheme. | Lloyds said it was in talks with the government about the insurance scheme, which is known as the Asset Protection Scheme. |
| It would insure Lloyds against further losses from bad loans, but would probably lead to the government increasing its stake in the bank. | It would insure Lloyds against further losses from bad loans, but would probably lead to the government increasing its stake in the bank. |
| Lloyds said that about 40% of the charges it took in the first six months related to assets that it planned to put into the scheme. | |
| RESULTS ROUND-UP Barclays profit £2.98bnHSBC profit £2.98bnNorthern Rock £724.2m loss Crunch time for UK banks Check banking sector shares | RESULTS ROUND-UP Barclays profit £2.98bnHSBC profit £2.98bnNorthern Rock £724.2m loss Crunch time for UK banks Check banking sector shares |
| Stephen Timms, chief secretary to the Treasury, said the results were broadly in line with what had been expected at the time of the Budget, so the amount of money set aside to cover the insurance scheme should still be adequate. | Stephen Timms, chief secretary to the Treasury, said the results were broadly in line with what had been expected at the time of the Budget, so the amount of money set aside to cover the insurance scheme should still be adequate. |
| Lloyds predicted that its charges for bad loans would be smaller in the rest of 2009 and that there would be an upturn in the economy in 2010. | Lloyds predicted that its charges for bad loans would be smaller in the rest of 2009 and that there would be an upturn in the economy in 2010. |
| Because of accounting technicalities related to its takeover of HBOS, Lloyds made a pre-tax profit of £6bn for the period. | Because of accounting technicalities related to its takeover of HBOS, Lloyds made a pre-tax profit of £6bn for the period. |
| HAVE YOUR SAY The country doesn't produce much other than financial services these days John Smith, Bristol Send us your comments | HAVE YOUR SAY The country doesn't produce much other than financial services these days John Smith, Bristol Send us your comments |
| But the group said that as a result of the takeover of HBOS, that figure was "of limited benefit". | But the group said that as a result of the takeover of HBOS, that figure was "of limited benefit". |
| The takeover also means that it is difficult to find figures for the first six months of 2008 with which to compare these figures, but Lloyds said that the £4bn loss compared with a £2.8bn profit for the same period last year. | The takeover also means that it is difficult to find figures for the first six months of 2008 with which to compare these figures, but Lloyds said that the £4bn loss compared with a £2.8bn profit for the same period last year. |
| Lloyds said that the proportion of mortgages more than three months in arrears had risen to 2.44%, compared with 1.79% at the end of 2008. The national average reported by the Council of Mortgage Lenders at the end of March was 2.39%. | |
| Lloyds' shares had risen 7.9% to 90.9 pence by mid-morning. | |
| 'Lurched to the other extreme' | |
| Mr Timms welcomed the signs of increasing borrowing from Lloyds. | Mr Timms welcomed the signs of increasing borrowing from Lloyds. |
| "Lloyds is starting to do the things we need banks to be doing: £18bn of mortgage lending in the first six months of this year and 60,000 new start-up business accounts," he said. | "Lloyds is starting to do the things we need banks to be doing: £18bn of mortgage lending in the first six months of this year and 60,000 new start-up business accounts," he said. |
| But Robert Peston points out that claims that Lloyds is doing its bit appear to be at odds with a 9% reduction to £198bn in the value of its loans and advances to corporate customers over the past six months. | |
| Liberal Democrat Treasury spokesman Vince Cable said that big banks were still not lending enough to viable businesses. | |
| "They were reckless in the past - they over-lent in many cases - now they've lurched to the other extreme," he said. | |
| "Good British companies cannot get credit and large numbers of people are losing their jobs as a result, making the recession worse." |