LONDON (AP) - Lloyds Banking Group PLC managed to more or less halve its loss in 2012 even though it raised the amount of money it has put aside to pay for the mis-selling of insurance products but The bank said Friday it made a full-year loss of 1.34 billion pounds ($2 billlion), as against the 2.71 billion pounds deficit it recorded in 2011. Despite the loss, the bank is optimistic about its outlook and pointed to an improvement in its underlying performance in 2012. "We are making significant investments in our simple, lower-risk, customer-focused U.K. retail and commercial banking model, thereby continuing to support our customers and helping Britain to prosper," said chief executive Antonio Horta-Osorio, who despite the losses will receive a 1.48 million pound bonus. "We expect this to enable us to return to profitability and to grow our core business, to realise our full potential to deliver strong, stable and sustainable returns to shareholders, and to allow U.K. taxpayers' investment in the group to be repaid," he added. The bank, that is 39 percent owned by the British government, has suffered over the past couple of years by the costs of the insurance mis-selling to individuals and to businesses. Other banks have been hit by similar charges stemming from the mis-selling of insurance products. The initial market reaction was negative, with the share price down 3.4 percent soon after the open at 0.53 pounds. "Despite underlying improvement in the wider business, the large rise in mis-selling provision has marred otherwise good results," said Rebecca O'Keeffe, head of investment at Interactive Investor.