The bank blamed credit crunch losses and problems in its insurance business for the reverse.
Half-year pre-tax profits totalled £599m against £1.99bn in the first half of last year.
Lloyds TSB also took a £585m hit from the credit turmoil and investment write-downs in its insurance arm.
But Lloyds said its underlying performance reflected good “momentum”, with adjusted profits up 11% to £2.16bn.
Today’s figures bring the group’s total credit crunch impact to £972m – although this is a fraction of the write-downs for many of its rivals.
Lloyds was also hit by a significant drop in the value of investments at its Scottish Widows business in the face of volatile stock markets.
However, Lloyds signalled that it was not yet planning to follow in the footsteps of other major banks with a multi-billion pound fundraising move.
Chief executive Eric Daniels said the bank’s capital position was “very robust” and should help the group weather the market and economic turbulence.
Lloyds posted a 15% rise in underlying profits at its retail banking arm, to £911m.
Customer deposits rose by 10%, but the bank continued to trim its mortgage book.