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London - Britain's state-rescued Lloyds Banking Group returned to first-half net profit on Thursday, just as the government looks to return the bank to the private sector.
Shares in LBG soared, also in reaction to the bank's announcement that it was looking at resuming dividend payments.
LBG posted profit after tax of £1.56bn ($2.36bn) in the six months to June 30, which compared with a net loss of £697m for the first half of 2012, the bank said in an earnings statement.
LBG, 39%-owned by the British taxpayer, has been boosted since the start of the year by rising income, deep cost-cutting and a drop in bad loans.
"While the UK economy remains subdued and we await further clarification on the detail of regulatory implementation ... we expect to deliver further progress in the remainder of 2013 and beyond," LBG chief executive Antonio Horta-Osorio said in the statement.
LBG's share price surged 8.49% to 74.27 pence, topping London's benchmark FTSE 100 index.
"Lloyds has blown away some investment cobwebs as it posted a set of numbers which have beaten expectations on most counts," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers."The company continues to target cost reductions and the sale of non-core assets, whilst also improving operating interest margins and general impairment provisions, as well as strengthening its capital cushion."
Horta-Osorio meanwhile said that LBG was looking into the possibility of resuming dividend payments to shareholders.
"As a consequence of the significant progress made in strengthening the balance sheet we now expect to commence discussions with our regulators in the second half of this year on the timetable and conditions for dividend payments," the Portuguese national said in the statement.
LBG was created by a merger of Lloyds TSB and rival British lender HBOS following the 2008 global financial crisis and ahead of its state rescue.
British finance minister George Osborne recently announced that he was considering share sale options for the bank as the government seeks to return it to the private sector along with bailed-out Royal Bank of Scotland.
