Lloyds Banking Group has today announced that its profits fell by 80 per cent in 2008, compared to the previous year.
The announcement follows the group's take over of HBOS which concluded last month. And while Lloyds continued to be £807million in profit, HBOS contributed to its reduction reporting pre-tax losses of £10.8billion last year.
The merger between Lloyds TSB and HBOS was rushed through last year as HBOS was on the brink of collapse. The bank was in such dire straits that competition rules were waivered by the Government meaning that Lloyds Banking Group now has 28 per cent of the UK's mortgage market.
Commenting on the losses, Lloyds Banking Group
chairman Sir Victor Blank said: "We know the short-term outlook for the enlarged group is challenging.
"Whenever economic conditions do begin to normalise, however, we believe we will be in a very strong position to reap the benefits.
"Our strong franchise across the whole range of product lines will enable us to do just that. In the meantime, our imperative is to manage the business as effectively as possible during these challenging times."
However, despite still being in profit unlike RBS
, the Lloyds Banking Group losses were larger than expected by city analysts, which has impacted the financial markets, so too has its failure to announce the exact terms of its participation in the Asset Protection Scheme.
Commenting, Joshua Raymond market strategist at City Index said: "The banks are lower today on the back of the Lloyds numbers and we had hoped we would learn the scale of assets to be placed under the asset protection scheme. This is where the majority of profit taking has taken place.
"Lloyds TSB's profits for 2008 were lower than expected. When you look at the group as a whole, you have Lloyds TSB underperforming and the group itself severely handicapped by HBOS's toxic debt. This brings into question the scope for future earnings."
According to reports, Lloyds Banking Group is currently in discussions over its participation in the Asset Protection Scheme.
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