LONDON - Lloyds Banking Group said on Thursday that its second-quarter profit more than doubled, as the part-nationalized British bank took another step toward privatization.
Lloyds, which received a multibillion dollar bailout from local taxpayers during the financial crisis, said its profit in the three months through June 30 rose to £1.4 billion, or $2.1 billion, compared to £547 million in the same period last year. The bank’s revenue increased slightly, to £4.8 billion, over the same period.
Lloyds has been shedding assets and reducing its balance sheet in a bid to increase its profitability before the start of the government’s potential share sale in the bank.
George Osborne, the British Chancellor of the exchequer, said in June that the government was “actively considering options for share sales in Lloyds,†and has appointed JPMorgan Chase to advise on a potential share sale for both Lloyds and Royal Bank of Scotland, which also received a bailout.
The British government has said that the break-even point on selling its 39 percent holding in Lloyds is around 61 pence, and the company’s stock is currently trading at 68.5 pence. The bank’s share price has risen 123 percent over the last 12 months.
“The share price is now in a position where the government can return the bank to the public at a profit,†Lloyds’s chief executive, Antonio Horta-Osório, told reporters on Thursday. “We have completed the first phase of recovery, and now it’s the government’s decision.â€
Mr. Horta-Osório declined to say when a potential share sale would start.
In a sign that Lloyds is starting to woo potential investors, the bank said Thursday that it would enter into discussions with local regulators about restarting dividend payments to shareholders in the second half of the year.
As part of its reemergence as a profitable bank, Lloyds has continued to shed assets, while provisions connected to delinquent loans fell almost 50 percent, to £811 million, in the second quarter of 2013.
The firm said that its so-called non-core assets had fallen 16 percent, to £82.6 billion, over the last 6 months, and were now expected to drop to around £70 billion by the end of the year.
The improvements helped to support the bank’s first half earnings, as it reported net income of £1.58 billion, compared to a £662 million loss for the same period last year. The first-half profit follows three consecutive years of annual losses for the British bank.
Despite Lloyds’ improved financial performance, the British bank is still dealing with a number of past wrongdoings that have cost the firm billions of dollars in legal costs.
On Thursday, Lloyds said that it had set aside an additional £450 million to repay customers who had been inappropriately sold insurance products. The firm also said it had made another £50 million provision related to delays in how a company that had been contracted by Lloyds to handle customer claims processed complaints.
All told, Lloyds has now set aside more than £7 billion to cover legal costs related to the inappropriate sale of insurance products to clients.
The bank also said that its core Tier 1 ratio, a measure of the firm’s ability to weather financial shocks, now stood at 9.6 percent, and would rise to above 10 percent by the end of the year.
