This has put the group back in the black for the first time since it was bailed out by the government after making a loss before tax of £6.3bn in 2009.

Lloyds’ retail division reported profit before tax of £4.7bn in 2010 up from £1.9bn in 2009.

Last year, Lloyds’ brands provided £30bn of gross mortgage lending, including remortgages, compared to £35bn in 2009.

Its gross mortgage lending exceeds its commitment to the government to lend £23bn to homeowners for the year to 28 February 2011.

The lender said that 70% of new mortgage lending was for house purchase rather than remortgaging, with 50,000 first-time buyers supported onto the property ladder.

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Lloyds said new lending quality continued to be good, with subsequent early arrears at pre-recessionary levels.

Lloyds revealed the proportion of mortgages on SVR now account for 48% of outstanding balances and is expected to rise only modestly in 2011. Mortgage margins have reflected this, along with lower LIBOR to base rate spreads and higher new business margins.

The average LTV on new mortgage lending was 60.9%. up slightly from 59.3% in 2009, while the average LTV of its mortgage portfolio was 55.6%, up from 54.8% at the end of 2009. It said this was consistent with a modest net fall in house prices since December 2009.

The group revealed a 62% drop in impairment charges on secured lending, which totalled £292m in 2010, down from £789m in 2009.

It said the reduction reflected reduced impaired loan levels and improved arrears in the first half of 2010. However, it noted that the second half of the year, particularly Q4, showed signs of strain, with fewer customers returning their accounts to order than was the case six months ago.

While house prices fell slightly over 2010, Lloyds revealed that the proportion of its mortgage portfolio with an indexed LTV of more than 100% was broadly stable at 13%.

The value of these mortgages more than three months in arrears increased slightly by £0.2bn to £3.2bn, representing 0.9% of its portfolio.

Meanwhile, the number of mortgages new to arrears was also relatively static over the last 12 months, with Lloyds stating it is well below the peak of H2 2008.

However, it warned that the signs of strain in the second half of 2010 and subdued economic environment could result in an increase in secured impairment charges in 2011.

Its mortgage balance reduced by £3.8bn.

Outgoing group chief executive, Eric Daniels, said: “As a result of the significant progress we have made in 2010, Lloyds Banking Group is now a much stronger business and is well positioned to realise the potential within its franchise.”