Britain's state-rescued Lloyds Banking Group said on Thursday that net profits slumped 57 percent in the first half, hit by compensation for insurance mis-selling and fines over Libor rate rigging. Earnings after taxation dived to £665 million ($1.125 billion, 840 million euros) in the six months to June. That was down from £1.560 billion a year earlier when results were boosted by sales of assets and government bonds, LBG said in a statement.
The bank added however that underlying profit, which strips out one-off costs and provisions, rallied 32 percent to £3.82 billion. And charges for problems such as bad loans dropped 58 percent to £758 million, helped by Britain's improving economy. "We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity, by investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency," said LBG chief executive Antonio Horta-Osorio.
"As a result, we substantially improved our underlying financial performance and delivered a statutory profit, despite further charges for legacy issues." The lender's performance was hit by £1.1 billion of legacy charges, including this week's £217-million fine for its role in the Libor interbank rate-rigging scandal. Part of the fine also related to attempts by the bank, which is 25-percent owned by the British taxpayer, to manipulate fees for participation in a government-backed scheme to support lenders during the global financial crisis.
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