Page last updated at 12:37 GMT, Friday, 19 March 2010

Lloyds Banking Group predicts a profitable 2010

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Lloyds Banking Group shares rose sharply after it forecast that it would make a profit this year, despite making heavy losses on bad loans in 2009.

The firm, which is 41% state-owned, said it now expected to write off less than previously expected in both its retail and corporate businesses.

Lloyds made an operating loss of £6.3bn ($9.5bn) last year.

This was blamed on bad loans made by Halifax Bank of Scotland (HBOS), which Lloyds took over at the start of 2009.

Lloyds has a plan to wean itself off that public-sector drip by reducing the loans and investments on its books
Robert Peston
BBC Business Editor

Lloyds said trading performance in the first 10 weeks of 2010 had been "strong" and that costs are "well controlled".

"The group believes that it will be profitable on a combined businesses basis in 2010," it added.

Lloyds, which cut thousands of jobs last year, is implementing a restructuring plan aimed at saving £2bn of costs by the end of 2011.

"People are estimating it will be 2012-2014 before we, the taxpayer, can get our investments back, by putting these banks back into the private sector," said Chris Skinner from Balatro.

"But maybe it could be 2012 - or even 2011 - for Lloyds."

Lloyds shares rose nearly 10% in morning trading, making them the top riser in the FTSE 100 share index.

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