Lloyds TSB increases profit

The UK’s fifth-largest bank, Lloyds TSB, has reported an increase of 13% in retail banking profit in the first 6 months of 2007. Costs during the period increased by 6% and 4% of the increase was acquired through the refunding of overdraft charges.

At a group level, pre-tax profits increased by 15%, to £2.01 billion, and revenues increased 8%, to £6.6 billion. The bank expects the latter half of 2007 to produce similar growth. It has publicised that its spending for the year so far in refunding fees for unauthorised overdrafts amounts to £36 million.

This compares with the HSBC figure of £115 million for the same period, especially since Lloyds has the larger UK retail customer base. However, Lloyds’ customers may not be as happy with the figure as its shareholders. The bank has been accused of taking a ruthless approach than some of its rivals when settling claims for unfair charges.

In addition, the bank has also sold its closed life insurance business, Abbey Life, for £977 million. Abbey Life manages around £12 billion of assets held in approximately 1.2 million policies. The business has been acquired by Deutsche Bank and Lloyds TSB will make approximately £290 million profit when the transaction is completed in late 2007.

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