Profits dip for Lloyds

Lloyds TSB has reported annual profit ahead of expectations, but company profits still slipped 20 per cent over 2004.

Lloyds blamed the drop in profits on overseas sell-offs, announcing that 2004 pre-tax profits, post-exceptionals, fell to £3.49 billion, smaller than the £3.3 billion predicted by analysts. Strong balance growth in mortgages, personal loans and credit cards boosted profits in its retail banking division by five per cent to £1.8 billion.

Britain's fifth biggest bank sold a number of overseas businesses for £1.83 billion in the year to December 31st, including its New Zealand and Brazilian units.

Pre-tax profit from continuing operations rose 10 per cent to £3.36 billion as profit increased at all its businesses, Lloyds reported. The company said strong earnings momentum continued in the second half of last year and recommended a total dividend of 34.2 pence a share, unchanged from 2003.

Lloyds said the 2004 figures reflected a "higher quality" of earnings than in previous years and pointed out that it was now allocating capital more efficiently and starting to demonstrate better growth across all its divisions and key businesses.

"The five Latin American businesses that we sold had impacted adversely on our performance," chief executive Eric Daniels commented. He added that the Latin American operations had incurred losses of more than £200 million in the five years to their sell-off.