Lloyds Banking Group has announced pre-tax profits totalling £2.21 billion for 2010.
It is the first time the group has posted a profit since it was bailed out by the Government with public money during the economic crisis.
In 2009, Lloyds announced a £6.3 billion loss, a figure that was largely influenced by the takeover of the Halifax Bank of Scotland.
The group said that the figures represented good trading performance against a backdrop of modest growth in the UK economy.
Bad loans at the bank fell significantly in 2010, down from £24 billion to £13 billion.
Some 1.9 million current accounts were opened in 2010, as were five million new savings accounts. Deposits placed at the bank rose by 5%.Lloyds also said it expanded its mortgage lending to UK homeowners and supported more than 50,000 first-time buyers. Around £49 billion was also lent to businesses, including £11 billion to small and medium sized firms.
"2010 was an important year for Lloyds Banking Group, marking our return to profitability and a further execution in risk in our business," said outgoing chief executive Eric Daniels.
"Our significant progress this year has positioned the Group well to become the best bank in the UK for all our stakeholders, including our customers, shareholders and employees."
The former chief executive of Santander UK, Antonio Horta-Osario, is poised to take over Lloyds in March.
The announcement comes on the back of RBS posting a loss of £1.13 billion earlier this week, while Barclays posted profits of £6 billion.
HSBC is to announce its 2010 results on Monday 28 February.
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