The lender cited increased funding costs and a weak UK economy as factors for its Â£2.3 billion ($3.78 billion) reduction over the six-month spell.
A one-time charge for mis-selling payment protection insurance was the main reason for the movement, however, with the net losses comparing with the Â£596 million net profit experienced by the bank over the same period one year earlier.
Antonio Horta-Osorio, chief executive of the institute - which was formerly named Lloyds TSB Group - said the bank has been making "substantial progress" since June, adding its performance is stable "despite the ongoing challenges of economic and regulatory uncertainty".
Profit for Lloyds in the six months leading to June 30th - before tax and additional adjustments and charges - came in at Â£1.1 billion, which was markedly less than the Â£1.6 billion recorded for the same period in 2010.
By Tony Aynsley