Lloyds TSB H1 pre-tax profits rise by 4 percent

Lloyds TSB H1 pre-tax profits rise by 4 percent

	Published : Wed, 02 Aug 2006 13:25 By : Phil Bateman Print this Story

LONDON - Banking group Lloyds TSB reported an 8 percent increase in underlying half-year profits, but soaring levels of bad debts as well as a sluggish retail bank revenue growth meant that the results were average at best.

Britain's fifth-biggest bank reported a 4 percent rise in pre-tax profits to £1.77 billion from £1.71 billion reported at the same time last year. But the bank said it was seeing added deterioration in bad debts. “The deterioration in the unsecured consumer lending environment, particularly reflecting the changes to personal bankruptcy laws, has led to an increase in our impairment charge," it said in a statement. Impairment losses accrued on loans and advances jumped 20 percent to £800 million during the period.

UK's biggest unsecured lender admitted that the rise in bad debts was mainly due to unforeseen deterioration in unsecured lending as well as the changes in personal bankruptcy laws, which came into effect last year. Impairment charges for UK retail business rose 16 percent to £632 million. Lloyds said it expected "greater stability" in the impairment charges for the second half of the year as its lending criteria would be tightened. "The rate of growth in the number of customers filing for bankruptcy and IVAs (Individual Voluntary Arrangements) does... remain a key factor in the outlook for retail impairment," the bank said.

Lloyds also reported a 6 percent rise in overall income and a 1 percent increase in overall costs. The Scottish Widows life assurance business also reported robust growth with a 15 percent rise in pre-tax profits.

"Overall, we have made a good start to 2006, delivering good results whilst continuing the successful implementation of our growth strategies across the group, and I look forward to reporting our further progress at the end of this year," said Eric Daniels, chief executive of Lloyds TSB.