Lloyds sees £2.21bn annual profit

Lloyds Banking Group has returned to profit for the first time since it was bailed out by the government at the height of the financial crisis.

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

A recovery in 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 group had already revealed outgoing chief executive Eric Daniels would receive a £1.45m bonus.

Mr Daniels said that 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 added it had trimmed its bad debts thanks to the “slowly improving economic environment”, but warned its problems in the Irish Republic had worsened in the last three months of the year, with bad loans hitting £4.3bn pounds 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.