LONDON (Reuters) - Lloyds Banking Group said its HBOS unit made a hefty loss last year due to bigger-than-expected bad loans, wiping nearly a third off the group's stock market value.
HBOS (HBOS.LO)had a pretax loss of 8.5 billion pounds ($12.28 billion) for 2008, Lloyds said in a statement Friday, driven by 7 billion pounds in bad loans at the bank's corporate division and a further 4 billion pounds in asset write-downs.
In November, HBOS had estimated its corporate impairments at just 3.3 billion pounds.
By 1427 GMT (9:27 a.m. EST), Lloyds Banking Group shares were down 32 percent at 61.1 pence.
"The market doesn't like the fact that in a period of a month the corporate losses (at HBOS) are twice what they had announced," said Mamoun Tazi, analyst at MF Global.
Lloyds said the big rise in bad loans and write downs were driven by falling asset values as markets continued to deteriorate.
It said the increase also reflected the application of Lloyds own "more conservative" accounting methods at HBOS since the two banks joined forces late last year.
Lloyds Banking Group's Lloyds TSB unit made a profit of about 1.3 billion pounds, the company said.
($1=.6920 pounds)
(Reporting by Myles Neligan and Steve Slater; editing by Simon Jessop)
