State-controlled Lloyds Banking Group says it is on target to deliver a "good" financial performance for 2010.
The bank, which returned to profit during the first half of the year, says loan impairments continued to decline in Q3.
In the core banking business, Lloyds expects a modest improvement in banking net interest margin in the second half of 2010, helped by lower costs.
"We continue to monitor the economic environment carefully but, notwithstanding this, we are pleased to be reporting good progress against our strategic priorities," outgoing CEO Eric Daniels said in a statement.
"Based on the group's current economic and regulatory assumptions, we continue to expect the group to deliver a good financial performance for the full year."
Lloyds, which is 41%-owned by the UK government, added its lending to firms so far in 2010 now totalled £35bn. It, along with a number of other banks, has been criticised by the government for not lending enough.
The company said new mortgage lending continued to be focused on first-time buyers, and that so far this year it had helped more than 35,000 people buy their first home. However, it said mortgage demand remained weak.
It also said it was continuing to cut costs as it further integrated Halifax Bank of Scotland (HBOS) into its core business.
Lloyds needed emergency funding from the government in October 2008, at the height of the global financial crisis.
It subsequently needed more financial support from the government following the completion of its deal to buy troubled HBOS in January last year.
Additional reporting by Sharecast
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