Lloyds TSB warns on credit climate
Friday, 24 February 2006British bank Lloyds TSB reported higher profits today but said the cost of protecting its retail banking operations against bad debts had risen by a third.
The group said impairment losses at its UK retail banking arm totalled £905m last year after more customers struggled to repay money on time. That represented an increase of £229m on the previous year and Lloyds warned that the retail credit environment was likely to worsen over the next six months.
But the damage to its overall results was limited by healthier loans to corporate clients and the group said the situation at its retail banks should stabilise after June.
Its comments were delivered alongside a 10% increase in pre-tax profits to £3.82 billion and news that it would pre-empt an assessment of its pensions liabilities by setting aside £155m to cover the trend of staff living longer.
Lloyds is currently in the midst of a cost-cutting drive that includes simplifying its back office operations, with more than 2,700 posts removed over the past year. Savings of £275m a year are being targeted on an initial investment of less than £200m.
