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Negative charges rise for Lloyds

LLOYDS Banking Group PLC warned yesterday that impairments in its lending portfolios have risen significantly in the first quarter, but said that they had already been accounted for or would be covered by the government's insurance program.

The group, created by a government-backed merger, also posted a revenue growth on the back of favorable interest and currency rates, improved spreads in derivative deals and a good performance in wholesale activity.

"We continue to expect retail impairment levels to rise significantly during 2009, in both the secured and unsecured lending portfolios," the company said. "We expect continuing declines in commercial property prices and reducing levels of corporate cash flows as we anticipate a continuing difficult economic outlook. These factors are now leading us to anticipate further corporate defaults during the rest of the year, notably in the commercial real estate portfolios."

The bank said the real estate exposure of the portfolios at the Halifax Bank of Scotland, which was merged into Lloyds, are sensitive to an economic downturn.


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