20th Jun 2005 07:00
Lloyds TSB Group PLC20 June 2005 122/05 20 June 2005 LLOYDS TSB - TRADING UPDATE Lloyds TSB Group plc will shortly be meeting analysts ahead of its close periodfor the half-year ending 30 June 2005. This announcement sets out theinformation that will be provided at those meetings. On a comparable basis under International Financial Reporting Standards*, LloydsTSB expects to deliver a satisfactory trading performance for the first half of2005 and continues to deliver good earnings growth, demonstrating furtherprogress in its key strategic priorities. The Retail Bank has continued to make progress in quality customer recruitmentand profitable franchise development, and is expected to achieve satisfactorylevels of customer lending and deposit balance growth during the half-year,against a backdrop of slowing consumer spending. The rate of consumer lendinggrowth in the first half of 2005 is however expected to be slightly lower thanthe double digit growth rates experienced in recent years. Scottish Widows has continued to benefit from its focus on product and capitalefficiency. The launch, in the second half of 2004, of a new range of productsmore tailored to the branch network distribution channel has delivered an upliftin unit trust/OEIC sales during the first quarter of 2005. In addition, strongprogress continues to be made in the distribution of life, pensions andlong-term savings products through the Independent Financial Advisordistribution channel. In Wholesale and International Banking, strong progress continues in developingand deepening our franchises. In Business Banking and Corporate Markets, inparticular, we are registering meaningful gains which reflect both our emphasison product and relationship cross-sell, and new customer acquisition. All mainbusinesses within the division continue to perform well and we are achievinggood levels of profitable new business. The Group's strong cost performance in recent years has continued into the firsthalf of 2005 and we have made further improvements in processing quality. TheGroup continues to expect to deliver revenue growth in excess of cost growth, onan IFRS comparable basis*, in the first half of 2005. Our focus on lending to existing customers, in a slowing consumer environment,has resulted in overall asset quality remaining satisfactory. On an IFRScomparable basis*, the Group's impairment charge for loan losses from itscontinuing operations, as an annualised percentage of average lending, isexpected to be broadly consistent with the provisions charge in the first halfof 2004. A higher charge in retail banking, reflecting an increase in thenumber of customers experiencing repayment difficulties, is expected to beoffset by a lower charge in the Group's corporate lending portfolios. Current indications remain that the overall impact of the full implementation ofIFRS, excluding the volatility introduced by the requirements of IFRS and FRS27, will be to reduce the Group's full year reported earnings per share,compared with those that would have been reported under UK GAAP, byapproximately 6 per cent. Profit before tax (before volatility) is expected tobe approximately 8 per cent lower. This likely reduction in earnings in 2005 isalmost entirely due to changes in the timing of income and expense recognitionin the Group's financial statements, in particular with regard to theapplication of effective interest rates, the reclassification of certainsecurities from equity to debt, and the impact of discounting on levels of loanloss impairment. The Group will endeavour to ensure that comparable underlyingbusiness performance and trends, which exclude the impact of prospectiveaccounting changes relating to the implementation of IFRS, are clearlyidentified on an ongoing basis. Eric Daniels, Group Chief Executive, said "We are continuing to make progressagainst our objective to deliver sustained earnings growth, despite signs of aslowing consumer environment in the UK, and the Group is on track to deliver asatisfactory trading performance for the first half of 2005." * excluding the impact of prospective accounting changes relating to theimplementation of IFRS For further information:- Investor Relations Michael Oliver +44 (0) 20 7356 2167Director of Investor RelationsE-mail: [email protected] Media Mary Walsh +44 (0) 20 7356 2121Director of Corporate RelationsE-mail: [email protected] FORWARD LOOKING STATEMENTS This announcement contains forward looking statements with respect to thebusiness, strategy and plans of the Lloyds TSB Group and its current goals andexpectations relating to its future financial condition and performance.Statements that are not historical facts, including statements about Lloyds TSBGroup's or management's beliefs and expectations, are forward lookingstatements. By their nature, forward looking statements involve risk anduncertainty because they relate to events and depend on circumstances that willoccur in the future. Lloyds TSB Group's actual future results may differmaterially from the results expressed or implied in these forward lookingstatements as a result of a variety of factors, including UK domestic and globaleconomic and business conditions, risks concerning borrower credit quality,market related risks such as interest rate risk and exchange rate risk in itsbanking businesses and equity risk in its insurance businesses, inherent risksregarding changing demographic developments, catastrophic weather and similarcontingencies outside Lloyds TSB Group's control, any adverse experience ininherent operational risks, any unexpected developments in regulation orregulatory actions, changes in customer preferences, competition, industryconsolidation, acquisitions and other factors. For more information on theseand other factors, please refer to Lloyds TSB Group's Annual Report on Form 20-Ffiled with the US Securities and Exchange Commission and to any subsequentreports furnished by Lloyds TSB Group to the US Securities and ExchangeCommission or to the London Stock Exchange. The forward looking statementscontained in this announcement are made as of the date hereof, and Lloyds TSBGroup undertakes no obligation to update any of its forward looking statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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