Lloyds posts loss but says overall picture improving Lloyds Banking Group PLC succeeded in halving its losses in 2012 even though it raised the amount of money it has put aside to pay for the mis-selling of insurance products. The bank said Friday it made a full-year loss of £1.34-billion ($2-billlion U.S.), as against the £2.71-billion 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 bonus. "We expect this to enable us to return to profitability and to grow our core business, to realize 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. His bonus will be linked to the future value of Lloyds shares. The bank, that is 39 per cent 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. There are indications the British government is interested in selling some of its shares in the banking group if prices reach the break-even level of 0.61 pounds. Horta-Osorio said he is confident British taxpayers will eventually recover the money paid out for the bank shares, predicting that more cost cutting measures and a stronger focus on the UK retail market would yield stronger results. He said the company's core businesses are strong and stable and that non-core assets are being shed, with portfolio reductions ahead of schedule. The initial market reaction was negative, with the share price down 3.4 per cent soon after the open. "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. The bank's earnings report did not specify how much it may eventually have to set aside to deal with allegations involving the rigging of the LIBOR rate.