Compensating customers who were mis-sold insurance pushed Lloyds 3.25 billion pounds ($5.3 billion) into the red in the first half but the loss was broadly as expected and the British bank reiterated its full-year guidance.

Excluding the 3.2 billion pounds Lloyds had already earmarked to cover mis-selling liabilities, the bank's adjusted pretax profit was 1.1 billion pounds, down from 1.6 billion pounds reported a year earlier.

That was broadly in line with the 1 billion pound figure expected by analysts, according to the average forecast on Thomson Reuters I/B/E/S.

Our guidance given in our Strategic Review announcement on 30 June 2011 remains unchanged, the company said in a statement Thursday. We continue to monitor economic conditions closely, notably in the UK and Eurozone.

Lloyds, 41-percent owned by the British government after a credit crisis bailout, said it had cut impairment charges on bad loans by 17 percent to 5.4 billion pounds although its Wealth & International unit reported a 2.1 billion pound loss, primarily due to higher impairment charges in Ireland.

($1 = 0.609 British Pounds)

(Reporting by Sudip Kar-Gupta and Steve Slater; Writing by Paul Hoskins)