Taxpayer-backed Lloyds Banking Group has revealed pre-tax losses of £6.3 billion after taking a £24 billion hit on bad debts.
The group, which is 41% state-owned, posted the losses after impairment charges shot up by more than £9 billion last year after the takeover of struggling rival HBOS.
Lloyds chief executive Eric Daniels has already announced he will give up a £2.3 million bonus.
The bank’s boss had been entitled to a maximum 225% of his £1.04 million salary due to his “significant individual contribution”, but waived a bonus for the second year in a row to stave off another row over bank pay.
The losses are higher than those seen at fellow part-nationalised player Royal Bank of Scotland, which yesterday revealed a £3.6 billion deficit for 2009.
Lloyds has suffered due to the risky lending inherited with its rescue of HBOS, which was largely responsible for the soaring bad debts.
But the group today echoed comments from RBS in assuring that the worst of the impairments for toxic loans and struggling borrowers was behind it.
Lloyds said second half bad debts eased by 21%.
Tim Tookey, group finance director, said: “We believe the group’s overall impairment charge has now peaked, with a significant reduction expected in 2010.”
The group added that with signs of stabilisation in the wider economy, a “significant improvement” is expected across Lloyds this year.
Lloyds has been slashing costs following the HBOS deal and financial crisis, today revealing a mammoth 11,500 roles axed over the past 12 months.
It signalled further jobs pain today as it increased annual cost saving targets to £2 billion by the end of 2011.
Within its retail bank, Lloyds reported savings deposits up 4% last year and a 2% reduction in loans to customers, although it said it maintained a 24% share of the gross mortgage lending market.
Lloyds did not give any update on its commitments to Government lending targets, made in return for £20.2 billion in taxpayer cash pumped into the group.
It will give further details after the March deadline for the targets, but has already said it is short of aims for £11 billion in business lending, although on track to meet £3 billion in residential mortgages.
Today’s figures showed Lloyds booked a £11.2 billion “goodwill credit” on its balance sheet from the HBOS business, which it said was bought for significantly less than its book value.
Taking this into account, the group recorded a statutory pre-tax profit of £1.04 billion for 2009, according to Lloyds.