Lloyds TSB profits net shareholders a dividend boost

Lloyds TSB today cheered shareholders with its first dividend hike for five years, as the bank posted a £2bn (€2.9bn) profits haul for the first half of 2007.

The UK’s fifth-largest bank said it was “increasingly confident” about prospects for the year after a strong performance across the group.

The bank’s 5% increase in the dividend for the first time since 2002 came as it announced the sale of its Abbey Life business to Deutsche Bank for £977m (€1,449m).

Analysts praised Lloyds TSB’s “robust” performance and improving cost controls as the firm’s share price jumped by more than 4% today.

Collins Stewart analyst Alex Potter said: “These interims are some of the most positive Lloyds have posted in years.”

Mr Potter added: “Overdraft charges appear unlikely to be an industry issue. Lloyds TSB, as the UK market leader in current accounts, would have been expected to have the largest exposure to this.”

Mortgage arrears fell in the first half of the year, despite homeowners coming under pressure from higher borrowing costs.