Lloyds Banking Group expects its IT-enabled integration project with HBOS to save it £2bn by the end of 2011.
The integration of the two companies is one of the largest ever undertaken in the UK and has already saved over £1bn, Lloyds says.
Lloyds TSB acquired HBOS in 2009 to become Lloyds Banking Group. It is 41% owned by the taxpayer after the UK government's recapitalisation of the banks in 2008.
The group leapt back into profit in the first half of 2010, transforming a £4bn loss this time last year to a profit of £1.6bn before tax.
Revenue grew as the bank attracted more customers and halved charges for bad loans, and cost savings were also delivered by the ongoing integration programme which will join the systems of the two banks together.
The bank started designing and building the integrated technical infrastructure in 2009 and finished building the systems in the first half of this year, it said in its 2010 interim results.
It is now in the middle of testing the new infrastructure. The integration of commercial and retail systems, as well as data migration, are planned for 2011.
IT costs in the half year to June 2010 were £598m, compared to £621m this time last year and £599m in the second half of 2009.
2010 has so far been a busy time for IT staff at the group, with the implementation of an improved mortgage application process for mortgage brokers, delivery of a single internet banking platform, delivery of the Lloyds online procurement system to HBOS, and migration of all HBOS staff data onto the Lloyds TSB platform.
The changes have led to a reduction of 16,000 staff, although the company said a relatively small proportion of these were compulsory redundancies.
In 2009 it demanded its IT contractors accept a cut in pay.