Lloyds sees profits plunge

Taxpayer-backed Lloyds Banking Group swung to a loss in the first half of the year after it took a 3.2 billion pounds hit to tackle the payment protection insurance (PPI) scandal, it was announced Thursday.Lloyds, which is 41 percent state-owned, reported a 3.3 billion pounds pre-tax loss in the six months to June, compared to a 1.3 billion pounds profit last year.Stripping out the provision set aside for customers mis-sold PPI, the bank saw underlying profits plunge 31 percent to 1.1 billion pounds as it struggled with the "subdued" economic climate.Elsewhere, the bank confirmed it had received "a number of credible initial approaches" for the 632 branches it is being forced to sell by EU regulators and hopes to have a buyer by the end of the year.Lloyds chief executive Antonio Horta-Osorio unveiled his vision for the bank in June, which included 15,000 job losses as part of a cost-cutting programme.The group, which owns Halifax, Bank of Scotland and Cheltenham Gloucester bank, is being forced to sell branches in return for the 20 billion pounds in state aid it received following the 2008 credit crisis.The UK's biggest lender hopes these measures will push up the bank's share price to a level at which the Government could start reducing its stake at a profit.Meanwhile, Lloyds reduced its bad-debt losses by 17 percent to 5.4 billion pounds as improvements in its wholesale division offset a deterioration overseas, most significantly in Ireland, where the property market continues to fall.The decline in underlying profits is partly down to a decline in net interest margins - the gap between what a bank charges for loans and what it pays to borrow - from 2.12 percent to 2.07 percent.