Shake-up paying off for Lloyds TSB

Banking group Lloyds TSB reported satisfactory progress for the year so far today as it showed signs of benefiting from a strategic overhaul.

Chief executive Eric Daniels said the company remained on course to deliver the improved showing it had promised for the second half of 2004 and beyond.

The improvements come after a year in which Lloyds has sold a number of businesses, including the National Bank of New Zealand, as it attempts to focus on core franchises and to remove earnings volatility.

In an update covering the six months to June 30, Lloyds said its core retail banking and mortgages arm continued to progress, despite signs of a slowdown in demand for consumer credit and pressure on the profitability of its lending.

That was highlighted in its net interest margin, which was 2.97% compared with 3.03% in the second half of 2003, but still better than a year ago.

The bank continued to increase it share of its core markets with mortgage balances outstanding at March 31 totalling £73.4bn (€111.1bn), an increase of 13% on a year earlier. The net mortgage lending figure was £2.6bn (€3.9bn) against £2.2bn (€3.3bn) in the first quarter of 2003.

Personal loan and credit card lending also increased, with the figure for the opening three months of the year up 12% on a year earlier.

Lloyds added that it saw little change in provisions for bad debts, with the figure expressed as a percentage of average lending broadly similar to 2003 at 0.66%.

Mr Daniels, who is due to announce half-year results on July 30, said he was pleased with progress of the restructuring.

He added: “We are continuing to make good progress in our key priority to reposition the group for sustainable growth and we remain well positioned to deliver our planned improved performance in the second half of 2004 and beyond.”