Lloyds TSB post 7% increase in F1 profit, say outlook promising |
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Published
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Fri, 29 Jul 2005 16:35
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LONDON: The UK's fifth largest bank, Lloyds TSB Group Plc., posted a 7 per cent increase in its first-half profits. Higher consumer lending and an expansion of its corporate banking business were the prime factors for the performance, said the bank.
The bank's pre-tax profits grew to 1.67 billion pounds from 1.56 billion pounds a year earlier, against a 1.63 billion - 1.83 billion pound forecast by analysts. (Net income at 1.19 billion pounds from 1.09 billion pounds).
The bank is positioning itself as a vendor of insurance and credit cards to its existing customers and is focusing on its domestic business, even as rival banks are foraying into businesses abroad. The bank is the biggest provider of checking accounts in Britain.
Chief executive Eric Daniels said the bank has maintained strong flows of new business. The increase in profit is set against "a more challenging period in the economic cycle".
The banking industry in Britain has been experiencing an increase in bad debts. Personal bankruptcies had reached a record number in the first quarter, while home repossessions and arrears have increased in the first half after interest rates rose five times in two years.
Lloyds TSB said its consumer loan balances went up to 11.2 billion pounds (an increase of 11 per cent), while card lending reached 7.7 billion pounds (an increase of 8 per cent) and impairment losses on bad loans were at 670 million pounds (an increase of 52 per cent). Retail banking profit grew to 830 million pounds (an increase of 3.75 per cent) and profit from corporate and international banking increased to 662 million pounds (a rise of 14 per cent). There has been a decline in corporate loan losses.
The bank's cost-to-income ratio improved to 53.8 per cent from 54.9 per cent a year earlier and the net interest margin narrowed to 2.75 per cent from 2.89 per cent. The bank has a market value of 27.8 billion pounds.
Daniels was confident about the outlook for the next six months: "Our asset quality is satisfactory and our broadly based franchise means that we are well positioned to deliver a good trading performance in the second half of 2005 and beyond."
Lloyds TSB owns Scottish Widows and Cheltenham & Gloucester, and has 15 million account holders and more than 2,000 branches.
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