The bank, 43 per cent of which is owned by the taxpayer, said that bad debts acquired with the purchase of HBOS earlier in the year contributed to the poor performance.
During the same period in 2008 the financial institution made a profit of $4.73 billion, however the loss is not as large as the average of $8.62 billion that was predicted by six analysts in a Reuters poll.
Impairment losses were "significantly higher" at $22.66 billion, but the bank said that performance in the second half of the year is expected to improve.
"I have a great belief in the exciting prospects for the group going forward," chairman Sir Victor Blank remarked.
"We are very strongly positioned for long-term success," he added.
Lloyds has made a number of job cuts since the purchase of HBOS and last month announced that it would be removing a further 1,200 positions from its workforce.