Lloyds TSB shrugs off credit market turmoil

Lloyds TSB has today announced a 6% increase in underlying 2007 profit and raised its dividend.

The UK’s fifth largest bank said its annual profit before tax and volatility rose to £3.92 billion, up from £3.71 billion in 2006.

The ongoing turmoil in the financial markets has affected many of its rivals but the banking giant said its ‘prudent approach to risk’ had helped it weather the wider market troubles but cautioned that the industry was facing a turbulent 2008 amid slowing global economic growth.

Lloyds TSB raised its final dividend by 5% to take its full-year payout to 35.9 pence, also up 5% on the year and said it expects to increase the dividend over time.

Core retail bank profits increased 17% to £1.81 billion as it opened over 1 million new current accounts and held operating cost growth well behind income growth.

Lloyds TSB raised its write-down on its exposure to risky assets to £280 million from £201 million. However, this was small compared to the £1.6 billion write-down revealed by its high street rival Barclays.

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