Lloyds suffers pain of reckless HBOS lending

Author: By Kelly Macnamara, Press Association

The bank, which is 43 per cent owned by the Government, said impairments on
bad debt rose “significantly” to £13.4 billion, largely due to HBOS.

Due to complex accounting changes, Lloyds posted a statutory £6 billion
pre-tax profit today.

Lloyds said HBOS’s assets accounted for 80 per cent of the impairments.

The bank said the fall in property prices over the first six months of the
year had a significant effect on the group’s results because of the large
amount of related loans at HBOS.

It said more conservative assessments of HBOS’s commercial property assets
meant impairments, which were up from £2.5 billion in 2008, should peak in
the first half of the year.

Group chief executive Eric Daniels said: “Our first half loss was driven by
the high levels of impairment.

“The core business delivered a resilient performance, despite the weak economy.

“We are successfully managing the short-term issues and are well positioned to
outperform over the medium term, providing value to our customers and
shareholders.”

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