Lloyds TSB has unveiled a 20% drop in profits for the year - but the slip was smaller than expected.
Lloyds blamed the profits drop on overseas sell-offs
The UK's fifth-biggest bank said 2004 pre-tax profits, post-exceptionals, fell to £3.49bn ($6.65bn) against analysts' forecasts of £3.3bn.
Lloyds blamed the slide on the 2003 sale of overseas businesses for £1.83bn - which inflated that year's profits.
Among the businesses disposed of were its New Zealand unit and some South American units.
The company added that if those sales were excluded, comparable pre-tax profits rose 10% to £3.36bn.
Despite the drop in profits, Lloyds said its 2004 figures reflected a "higher quality" of earnings than in previous years.
"The five Latin American businesses that we sold had impacted adversely on our performance," chief executive Eric Daniels said.
Those operations had incurred losses of more than £200m in the five years prior to their sell-off, he added.
Earnings lost from the sale of its businesses in New Zealand and Brazil had been replaced within a year, the bank said.
Strong growth in mortgages, personal loans and credit cards at the bank helped push profits in its retail banking division 5% higher to £1.8bn.
The bank said it was starting to demonstrate better growth across all its divisions and key businesses.
Analysts reacted positively to the results. "These are a solid set of numbers," said James Leal at brokers Teather & Greenwood. "They are above consensus."
Shares in Lloyds TSB closed nearly 2% higher at 497 pence on Friday.
The results come at a bumper time for UK banks, with only oil giants Shell and BP outpacing them in terms of profits.
Experts have estimated that collectively UK banks are making more than £30bn, or more than £3m an hour.
This week, HSBC said profits had jumped 37% to £9.6bn - the biggest figure recorded by a UK-based bank.
Meanwhile, Royal Bank of Scotland (RBS) unveiled profits of £6.9n, respectively - up 14% while Barclays chalked up a 20% jump in profits to £4.6bn.