BANKING group Lloyds TSB
yesterday revealed a further
£387m hit from the credit crunch,
but signalled that there would be
no need for a cash call to investors.
Shares slipped in the high
street bank despite assurances
that Lloyds' funding position was
strong and it was firmly on track
to deliver a good first-half performance.
Each division saw double digit
growth in profits before tax in
the first quarter, excluding the
credit crisis impact, according to
Lloyds.
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Last night, shares in the bank
closed at 439p down almost three
per cent.
The writedown adds to £280m
already reported by the group
last year, but is far less than that
reported by its "big five" UK
banking rivals.
Lloyds hailed its lower-risk
strategy for helping it weather
the financial turmoil and said its
liquidity was robust, suggesting
it would not be following the lead
of rivals Royal Bank of Scotland
and Halifax Bank of Scotland
(HBOS) with multi-billion pound
rights issues.
Eric Daniels, Lloyds TSB group
chief executive, said: Despite
the more challenging market
conditions, the group remains
firmly on track to deliver a good
performance for the first half of
2008, excluding the impact of
market dislocation and insurance-
related volatility.
Our strong liquidity and funding
capability have ensured that
the group has continued to raise
wholesale funding at market
leading rates.
"This gives the group a competitive
advantage and has enabled
our corporate and retail relationship
banking businesses to
achieve strong levels of business
growth in the first quarter of the
year.''
The group said it had continued
to build on its strong customer
deposit base, with growth
in bank savings and cash individual
savings accounts.
Lloyds also stressed it had been
able to improve its market share
of new mortgage lending in spite
of the credit squeeze crippling
the home loan sector.
It said that it expected to see
"notable profit growth" in the
home insurance operation as
it kept costs under control and
in the absence of last year's unusually
high weather-related
claims.
The group's wholesale and international
banking division
took the £387m credit crunch hit
to first quarter pre-tax profits, although
this was relatively limited'',
said Lloyds.
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