LONDON (Dow Jones) -- Lloyds Banking Group PLC said Friday that its full-year pretax loss narrowed to GBP6.3 billion, as impairment charges continued to haunt the UK bank, but it said performance should improve starting in 2010.

Lloyds, 41%-government owned, echoed comments made by Royal Bank of Scotland Group PLC on Thursday that the worst has passed for UK banks.
“Despite the very difficult economy, 2009 was a very good year for us. We used 2009 to recapitalize the group and we are now at a very strong position,” Chief Executive Officer Eric Daniels told Dow Jones Newswires.
“The core business is going to deliver a strong financial performance, given that we are seeing all the current trends on margins, costs and impairments going in the right direction,” he added.
Both Lloyds and RBS received state aid during the financial crisis as their loan portfolios quickly turned sour since mortgage borrowers and companies had trouble repaying debt.
Lloyds reported a net profit attributable to shareholders of GBP2.83 billion, when including a GBP11.17 billion goodwill credit related to the HBOS acquisition. The bank had acquired the business at half book value in anticipation of the likely losses resulting from HBOS' troubled asset portfolios. Net profit for 2008 was GBP772 million.