Lloyds Banking Group's return to profit has set the stage for the government to decide "how and when" to start selling its £20bn stake in the bank, its chief executive said.
Lloyds's results released today showed a £2.1bn pre-tax profit for the first half of this year, a healthier level than the £456m loss in the same part of 2012.
Lloyds chief executive Antonio Horta-Osorio said it proved the bank was in a healthy enough state for the coalition to decide when to start selling its 39% stake.
"The government is now able to decide when and how to return taxpayers money at a profit."
Ministers could launch a share sale as soon as this week, with speculation mounting that the coalition would plan to have sold off its first chunk of Lloyds by September at very latest.
Lloyds shares rose by over 6% in initial trading on Thursday, up to a level of 72.87p, just below the average price at the time of the bank's bailout in 2008 of 73.6p.
Lloyds' profits surge came despite having to provide an extra £500 million for compensation in payment protection insurance mis-selling claims, taking the total set aside to £7.3 billion.
Horta-Osorio said: "We are now well on track to create a bank with a leading cost position, lower risk, a lower cost of equity, and products and services focused on our customers' needs, to deliver strong, stable and sustainable returns to our shareholders."
This comes weeks after chancellor George Osborne told the City in his Mansion House speech that the government was "actively considering" options for share sales. He added: "Of course, we will only proceed if we get value for the taxpayer".