Money set aside to cover bad loans fell from £13.4bn to £6.5bn.
Lloyds said the first half of 2010 was a significant milestone for Lloyds Banking Group as the group returned to profit.
It added: “Despite the challenging economic environment, the core business performed strongly and we continued to see positive momentum across all the key income lines.”
The bank, 41% owned by taxpayers, also said it was “well positioned to deliver strong financial performance over the coming years”.
The Lloyds share price is now about the same level it was when the government took its stake in Lloyds and it appears to be on course to hit gross lending targets set by the government as part of the conditions of the bail-out.
Lloyds said it had lent £23.7bn to businesses during the first half year, against a target of £44bn for the year to the end of March, and £14.9bn in new mortgages, against a target of £23bn.
However, net lending figures, which take into account not just money loaned out, but money repaid as well, paint a slightly different picture.
“[Lloyds’] total net loans to all households and businesses have dropped 1% to £368bn, and it is charging more for that credit relative to what it pays for funds,” said the BBC’s business editor, Robert Peston.
Lloyds boss Eric Daniels told the BBC the reason for the flat net lending was the fact that businesses and consumers were looking to pay down debt rather than increase their debt levels further.
“We are ahead of our lending commitments, [but] customers are behaving very prudently. Credit is available,” he said.