PROFITS AT BRITISH BANK LLOYDS took a hit from the bank’s Irish business, which have accounted for £4.3bn in bad loans at the bank, Reuters reports.
Bad loans in Ireland jumped from £2.9bn in 2009 to £4.3bn last year.
Despite the Irish bad debts, Lloyds reported a pre-tax profit of £2.2bn for last year after losing £6.3bn in 2009.
BBC correspondent Robert Peston said it was good to see the bank “back in the black”. He said that “Ireland, famously, has a few economic problems” and Lloyds had made some “very substantial loans” here.
Peston said that “the bad debt charge for those loans in Ireland going bad went up about £1.4bn”, which contributed to a deterioration in the bank’s profits in the second half of 2010 compared with the first half.
However, Eric Daniels, the bank’s outgoing chief executive, downplayed the impact of the Irish bad debts on the bank’s books:
The Irish economy is in fact running at very low levels and we expect we’ll see only a very modest rise in GDP in Ireland this year in 2011. So it’s a troubled economy, but that said, our portfolio actually did not have serious deterioration in impaired loans. But what we thought is given the outlook for the Irish economy, it would take longer to recover, and so we increased our provisional level.
Daniels said the Irish section accounted for just 2 per cent of the bank’s portfolio.
Lloyds previously closed its Halifax and Bank of Scotland (Ireland) branches in Ireland.
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