Lloyds TSB's pre-results trading statement released this morning has caused its shares to tumble 12p...
Lloyds TSB's pre-results trading statement released this morning has caused its shares to tumble 12p to 630p by midday as earlier readings of good headline sales figures have been replaced by reactions to the company's admission that it will have to boost the provisions set aside to cover bad debts primarily caused by falling stock markets.
Overall loans and advances to customers in the year to 31 March were up 12% to £128.3bn and the firm remains on target to end the year with the average customer holding 2.5 products.
The Scottish Widows life and pensions business has been trading "16% ahead of the comparative period in 2001", but that has been offset by a huge 31% drop in sales of unit trusts and ISAs.
And analysts are quoted after a meeting with the company this morning as saying that earnings issues involving Scottish Widows may yet call into questions Lloyds TSB's full-year dividend.
The company is going into its close period, the time when stock market-listed firms are prohibited from talking publicly about their expectations and directors are prohibited from trading in shares they own, so today's statement is all that investors will be able to go on for the next month or so.
With that in mind, the now expected first half losses of around £380m and continued questions over the trouble caused by falling investment returns balanced against the need to pay out term assurance and other life products are likely to keep hammering the company's share price.
The Lloyds TSB news was matched by an announcement from Abbey National, which said it may seek partnerships to develop its European business to help offset losses caused by its wholesale banking business in the past year.
That initially caused its shares to rise, before falling by 7p to 769.5p by midday.
Abbey is under pressure because of its decision to pump money into its Scottish Mutual insurance business, a tacit admission that it too is losing money because of falling stock market returns - just how much remains unanswered.
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