Lloyds Banking Group has said it has completed an "immense" system integration aimed at dramatically cutting costs.

As the part-nationalised bank announced a heavy annual loss, at £3.5 billion, it said that IT integration was playing a key part in cost cutting. Most of the loss came from payouts over missold payment protection insurance.

"As at 31 December 2011, we had realised annual run-rate savings of £2,054 million from the integration programme," said the bank in its annual financial statement. The integration concerns the addition of accounts from HBOS, which Lloyds acquired in 2009 as the financial crisis hit.

"A major part of the integration from an IT perspective was the migration of Halifax and Bank of Scotland customer accounts and data to the scaled Lloyds TSB platforms, and this was successfully completed in the third quarter."

The bank said it was "an immense exercise involving the migration of approximately 30 million customer accounts" as well as "35 billion pieces of data". The new platforms, it said, "will now provide the foundation for the group's transformation plans."

"This has been the largest ever financial services IT Integration, and at its peak it involved many thousands of colleagues across the organisation," it said.

The programme consisted of three phases. Firstly, it introduced the Lloyds TSB Branch Counter System to all Halifax and Bank of Scotland branches, and moved 3,800 HBOS cash machines to the Lloyds platform.

After that, HBOS' mortgage sales platform was rolled out to Lloyds TSB advisers.

In the final stage, the 30 million HBOS retail and business accounts were moved to Lloyds' platform, following 11 dress rehearsals, and 250,000 individual tests. Some 27,000 employees were trained on the new system.

The integration of systems, Lloyds said, will allow it to improve processes, decision making, sourcing, business structure, and product launches.

Last year, Lloyds spent £1.1 billion on the integration – taking the total to £3.8 billion spent. It said that through the programme, it has generated recurring annual savings of £2.1 billion so far. A significant amount also comes from large redundancy programmes and reducing offices.