Lloyds Banking Group has said it is “on track” for £2 billion savings from the merger of Lloyds TSB and HBOS, as it announced a return to profit.
The savings target will be achieved by next year, said the company, of which 41 percent is owned by the taxpayer following the UK government’s share purchases during the financial crisis. The group was formed through Lloyds TSB's acquisition of HBOs last year.
The target for savings was doubled in February from an original aim of saving a billion pounds, after the group announced it had removed £766 million from costs through removing duplication, improving procurement, and changes to its property estate.
The cuts achieved so far include £57 million from IT and £127 million from procurement. But staff cuts have also played a large part, removing £263 million from costs as 5,000 staff posts are cut, including nearly 3,000 operational employees.
Costs are being “well controlled” with integration savings on target, Lloyds chief executive Eric Daniels told the markets in a first quarter financial statement. But he did not reveal how much profit had been made. Last year, the bank lost £24 billion on bad loans.
“The group’s strong track record of effective cost control continues to yield benefit,” said the company. “The integration programme is progressing well and synergy savings continue to be delivered in line with the recent guidance.”
The original Lloyds TSB part of the group extensively uses Oracle Hyperion financial modelling systems, Microsoft SQL Server, the Sun Solaris operating system, Microsoft Windows Server and VMware virtualisation, among other key systems.
IT chiefs at the company have said in the past that these systems have many parallels with HBOS technology, easing the integration, but added that Lloyds also has a "large number" of its own unique bespoke applications in use. The group has not said which systems will be kept running.