Partly-state owned UK bank Lloyds Banking Group, which reported a £3.957 billion ($6.3 billion) loss in the first half of last year, swung back into profit in the six months to 30 June, at £1.6 billion, it said today.

The big turnaround in the profitability of the UK-listed bank, which shouldered the big losses of HBOS, the UK bank it bought at the height of the market turmoil, is sure to increase pressure on the firm to be sold back into private hands and for bailout cash to be repaid to the taxpayer.

However, the Wealth and International segment of the business logged a pre-tax loss in the six-months to 30 June of £1.609 billion, compared with a comparable loss in the year-ago period of £342 million. In the Wealth side of this segment, however, it reported a pre-tax profit of £156 million, up from £101 million.

The increased loss at the Wealth and International segment included a £592 million lower credit in respect of fair value unwind, Lloyds said in a statement.

“In the Wealth and International division, we built on the momentum of last year, delivering an annualised 12 per cent increase in wealth relationship customers,” Lloyds said.

"In Wealth, the focus has been on driving additional income growth from the group's affluent and high net worth client base through more effective use of the opportunities afforded by the retail and wholesale franchises to cross-sell wealth products to these customers. In the first half of 2010, customer segmentation across the wealth businesses has been implemented and businesses transferred as appropriate to align to this segmentation, the customer referrals model has been formalised, and a new UK investment proposition launched," the statement said.

"In International, the focus remains on managing the impaired asset portfolio and continued strengthening of the control environment.  The business aims to de-risk and reduce the balance sheet where possible, with net repayments in the International portfolio contributing £0.8 billion to the reduction in underlying local currency customer advances," it added.

Lloyds' Core Tier 1 capital ratio – a closely watched benchmark of a bank’s capital strength – rose to 10.3 per cent from 9.6 per cent at the end of December 2009.