Lloyds warning as HBOS losses dive

[JohnCenaFan28]

Beleaguered HBOS has slumped to annual losses of £10.8 billion and the bank's new owner has warned of a slide into the red this year.

Lloyds Banking Group - the UK "super-bank" created when Lloyds rescued HBOS last autumn - expects the enlarged group to post a loss as bad debts soar in 2009.

The woeful HBOS figures included a £9.9 billion pre-tax loss and an additional £900 million tax charge, while impairment charges jumped five-fold to £9.9 billion.

Even the more conservative former Lloyds TSB business - less impacted by the crisis - saw last year's profits tumble 80% to £807 million.

Shares in Lloyds - which is 43% owned by the taxpayer - had jumped 31% on Thursday but are now back down 20% as the company also failed to give details of its plans to use the taxpayer-backed Asset Protection Scheme.

RBS, which on Thursday reported a record £24.1 billion loss, is about to place £325 billion in toxic assets into the scheme but Lloyds only said it is in "advanced discussions" with the Government over the scheme.

The bulk of the bad debt charges came from HBOS's corporate lending arm, as flagged by Lloyds' surprise profit warning two weeks ago.

The division booked impairment charges of £6.6 billion after the bank's new owner took a more conservative view of its lending book. Bad debts as a proportion of its loans jumped to 11.9%.

The corporate arm has suffered through its heavy exposure to hard-hit sectors such as commercial property and housebuilding, but the HBOS retail banking business also suffered.

Mortgage arrears jumped and one in six HBOS mortgage customers were in negative equity at the end of last year, the figures show.

-Nova

[DUKE NUKEM]

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