This was put down to a £3.2bn provision the bank made for Protection Payment Insurance (PPI) claims following a High Court ruling.
In an interim results statement the bank said: "There are certain circumstances where customer contact and/or redress is appropriate. Although uncertainties remain, the group has made a provision of £3,2bn in this regard."
Lloyds also announced a group impairment charge of £2.6bn, £193m higher than the same period last year but down more than £1bn on the final quarter of 2010.
This was £500m more than expected mainly due to the bank’s exposure in Ireland, where the impairment charge was £1.14bn for the first quarter.
Lloyds is now allowing for further potential falls in Irish commercial property of around 10 per cent.
Non-core asset reduction was ahead of expectations at £20.7bn for the quarter, facilitating a faster reduction of reliance on government and central bank support.
The bank said: "The non-core asset reduction, combined with customer deposit growth and term issuance, has facilitated an accelerated reduction in our liquidity support from government and central bank facilities of £26.2bn to £70.4bn in the first quarter".
Lloyds exceeded its government lending commitment by providing £23.5bn for homeowners and £48.7bn to UK businesses for the 12 months to 28 February 2011.
It had promised to make available gross lending of £67bn, of this £23bn was to be for new home owners and £44bn for UK businesses.