As looked at in an earlier blog HSBC announced massive profits for the first quarter yesterday and today is the turn of Lloyds.
The bank which is owned by the UK tax payer has logged profits of around £1.6bn which is up massively on the loss of £4bn for the same period last year.
Experts suggest the reason behind this is the dropping rate of funds set aside to cover ‘bad loans’, the amount has gone from 13.4bn of last quarter down to £6.5bn.
A statement released by Lloyds described the announcement as “ a significant milestone for the Lloyds Banking Group,” adding that it was “well positioned” to deliver strong financial over the coming years.
The large majority of losses made by Lloyds was as a result of the HBOS takeover, which it has since been criticised for as many experts feel the group underestimated the extent of bad loans on the HBOS books.
As a result of this the government has to issue a bail out to the bank to the tune of around £20bn.
Lloyds reported earlier in the year that they were on course to make a profit for the first time in over 2 years but declined to give exact details, behind the scenes though the news allowed the company to increase borrowing rates. Making them odds on to hit lending targets this year.
Lloyds boss Eric Daniels added:
We are ahead of our lending commitments, but what we can’t do is prevent our customers from paying back. Our customers are behaving very prudently. Credit is available."
Other reports are due from remaining banks on Thursday and RBS on Friday, which will be the one financial experts will be looking at as Northern Rock have also reported a profit of £350m.