"Core income growth, margin improvement, integration savings, funding progress and balance sheet reduction all remain on target, giving us confidence that we will deliver a good financial performance for the current financial year."
However Lloyds Banking Group (LBG), which is 41-percent owned by the government after a bailout, also warned that impairments, or charges for problems and bad loans, remained at a "high" level, particularly because of ongoing problems in Australia and Ireland.
"In Ireland, impairment levels are expected currently to continue at similar levels to the first half of the year reflecting the well documented ongoing difficulties in the Irish economy," LBG said.
"In Australia, while we observe a generally robust economy, there are significant geographical and sector variations and property related assets situated outside the principal metropolitan areas have been particularly weak."
It added: "As a result, Wealth and International impairments in the second half of 2010 are expected to be similar to the first half, although still lower than the second half of 2009 which we continue to believe represented the peak for impairments in this division."
Daniels, who retires next year, faced criticism after overseeing the 2008 government-brokered takeover of former rival Halifax Bank of Scotland (HBOS), which was saddled with high-risk investments in the property sector.
Lloyds had suffered huge losses in 2008 and 2009, as bad debts rocketed in the wake of the HBOS rescue and a deep recession.
However, Lloyds bounced back into profit in the first half of 2010, as bad debts fell sharply despite challenging economic conditions.
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