Shares recovery helps Lloyds TSB

Lloyds TSB has unveiled a slight increase in profits, helped by the recent stock market recovery.

The High Street bank said pre-tax profits for the first six months of 2003 came in at £1.6bn ($2.5bn), 5% up on the same period last year, and in line with City expectations.

The company said its improved performance partly reflected "the absence of a significant negative variance arising from the weakness in global stock markets...in 2002."

The US and UK stock markets have risen by about a quarter since the start of the Iraqi conflict in mid-March, breaking a three-year old downward trend.

Lloyds added that it was keeping its half-year dividend - a payment to shareholders - unchanged at 10.7p per share.

There had been speculation that the bank would be forced to cut its dividend - the most generous of any FTSE 100 company - in order to pay for expansion plans.

'Challenging' conditions

Lloyds said that it increased its market share during the first half of the year, and expected to do so again in the months ahead.

But chief executive Eric Daniels warned that the overall economic environment remained "challenging."

He said the company was trimming its exposure to Latin America following the near collapse of the Argentine economy last year, and was "reviewing its options" for some subsidiary businesses, including the National Bank of New Zealand.

Lloyds also announced that it had agreed to buy the Goldfish credit card business from utility group Centrica.

Lloyds, which already owns 30% of Goldfish, is paying a premium of about 13.7% over the £900m that the credit card firm is currently owed.

"We are getting a strong brand and a high quality customer base which are valuable additions to our growing businesses," said Lloyd's head of retail banking Peter Ayliffe.

Lloyds shares were down 13p at 470p in early trade in London.