19th Jun 2006 07:00
Lloyds TSB Group PLC19 June 2006 71/06 19 June 2006 LLOYDS TSB - TRADING UPDATE Lloyds TSB Group plc will be holding discussions with analysts and investorsahead of its close period for the half-year ending 30 June 2006. This statementsets out the information that will be provided at those discussions. Lloyds TSB expects to deliver a strong trading performance for the first half of2006 and to continue to deliver satisfactory earnings growth, pre-volatility, asa result of further progress in its key strategic priorities. The Retail Bank has continued to make progress. Over the last 12 months theGroup has taken a number of steps to improve sales performance and, as a result,sales volumes through the branch network, telephone and internet banking arewell ahead of the same period last year. In particular, we continue to makesignificant progress in the recruitment of target current account customers.Good growth in savings and investment products, especially in bancassurance, haspartly offset the expected slowdown in unsecured consumer lending and relatedinsurance products. Cost control continues to be strong, notwithstandingfurther investment to improve the operational efficiency of the business. In Insurance & Investments, sales of life, pensions and long-term savingsproducts through both the bancassurance and Independent Financial Adviserdistribution channels have been strong. New business margins have remainedbroadly stable, compared with the first half of last year, as improvements inindividual product margins have been offset by the mix effect of strong salesgrowth in finer margin OEIC products. In General Insurance, recent investmentto re-engineer claims processes is reducing the cost of claims, resulting inimproved profit performance. Scottish Widows Investment Partnership hasdelivered a good increase in the level of net new business inflows which,combined with more favourable year on year equity markets, has supported goodprofit growth. In Wholesale and International Banking, good trading momentum has continued.Progress in our strategy to leverage the Group's excellent corporate and smallbusiness customer relationships continues to generate good levels of incomegrowth. Costs have been well controlled despite further targeted investmentbeing made in the enhancement of our product and distribution capabilities, andthe supporting IT infrastructure. Product margins are broadly stable compared to the first half of last yearalthough the overall Group banking margin is expected to be slightly lower,largely as a result of a change in business mix. The Group's strong costperformance has continued and, as a result, we expect to deliver revenue growthin excess of cost growth, in each division and at Group level, in the first halfof 2006. The Group's programme of efficiency improvement initiatives is ontrack to deliver net benefits in 2006 of circa £30 million. During the firsthalf of 2006 we expect net investment of approximately £20 million, as we haveinvested further in streamlining our IT division and consolidating a number ofback office operations. As indicated in our 2005 preliminary results announcement in February, theexpected further deterioration in the consumer lending environment in the firsthalf of 2006 has arisen, although the rate of increase in retail impairment isexpected to be slightly slower than the comparable increase in the first half oflast year. As a result of the improved quality of new business written during2005, we continue to expect greater stability in the level of retail impairmentin the second half of 2006, compared to the first half of the year. InWholesale Markets, asset quality has remained strong with no signs ofdeterioration in the overall quality of our lending. However, the high level ofrecoveries experienced in the first half of 2005 will not be repeated and as aresult of this, and a higher level of retail lending impairment in our AssetFinance business, the first half impairment charge in Wholesale andInternational Banking will be higher than in the first half of last year.Overall, Group asset quality remains satisfactory. In the first 5 months of 2006, high levels of volatility in equity marketscontributed to an adverse volatility relating to the insurance business of £87million. Banking volatility for the same period was adverse £4 million. The Group has recently reached agreement with the Lloyds TSB Group pensionschemes' trustees to fund the schemes' actuarial deficit of £1.5 billion over aperiod of 10 years. We also expect to continue to make additional voluntarycontributions and, if the Group's total deficit contributions remain at broadlythe same level as in recent years, we would expect to see the accounting deficit(£2.0 billion, net of tax) eliminated over a period of approximately 10 years,and the actuarial deficit over approximately 6 years. Eric Daniels, Group Chief Executive, said "We are delivering against ourfinancial goals whilst investing in the long-term growth of our businessfranchises. We expect that the result of building better businesses will besustained economic profit growth. The Group remains on track to deliver asatisfactory performance for the first half of 2006." Trading Update Webcast Details The Group Finance Director's briefing will be available as a live audio webcaston the Investor Relations website: at www.investorrelations.lloydstsb.com and arecording will be posted on the website later. Timetable 2006 Interim Results Announcement 2 AugustEx Dividend date 9 AugustDividend record date 11 AugustDividend payment date 4 October All dates are provisional and subject to change. For further information:- Investor RelationsMichael Oliver +44 (0) 20 7356 2167Director of Investor RelationsE-mail: [email protected] Sarah PollardSenior Manager, Investor RelationsE-mail: [email protected] +44 (0) 20 7356 1571 MediaMary 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:
Lloyds