"The profit will undoubtedly be a boost to the British government, given that it hopes to restore Lloyds to full private ownership in the next few months"
This was largely down to PPI costs falling from £4 billion to £1 billion.
However underlying profits for 2016 fell from £8.1bn to £7.9bn.
The government's stake in Lloyds is now below 5% and the Bank is expected to return to private ownership this year.
Helal Miah, investment research analyst at The Share Centre, said: "Investors should appreciate that Britain’s biggest mortgage lender stated that pre-tax profits for the period rose to £973m, which was up from a £507m loss in the same period last year.
"The profit will undoubtedly be a boost to the British government, given that it hopes to restore Lloyds to full private ownership in the next few months after the bank was bailed out by the tax payer in the 2008 financial crisis."
Laith Khalaf, Senior Analyst at Hargreaves Lansdown, added: "Lloyds is returning to full health after being knocked for six by the financial crisis, since which time the bank has become safer, more profitable, and a good source of dividends for shareholders.
"PPI has really been the major factor behind the big swing in Lloyds’ profitability. Costs of £4 billion in 2015 compare to just £1 billion last year, and looking forward to 2017, Lloyds will be hoping it has drawn a line under the whole PPI affair.
"However it’s not all unreservedly good news; Lloyds’ top line was flat, which shows how difficult it is for banks to make money with interest rates so low. The bank is also profoundly plugged into the domestic economy, so if there is a UK downturn as a result of Brexit, or indeed for any other reason, Lloyds will take a hit. If the bank does encounter choppy waters though, at least it’s doing so from a position of strength.
"The government stake in Lloyds is now below 5% which means it’s almost back to business as usual, and it looks like the taxpayer is at least going to break even on the bailout, and may well make a profit. The Lloyds share price has jumped on the back of these latest results, which bodes well for the remaining shares that the government is yet to sell."
