Lloyd TSB has announced it is putting aside additional funds to manage bad debt in the second half of 2005.
The high street lender says while its impairment charge for loan losses from it continuing operations is expected to be broadly consistent with the provision change in the first half of 2004 more of its customers are having difficulty repaying loans.
In a trading statement released ahead of the publication of its interim results on 30 June, Lloyds TSB says its retail banking arm is expected to “achieve satisfactory levels of customer lending and deposit balance growth” but that the rate of consumer lending growth in the first half of 2005 is expected to be “slightly lower than the doubly digit growth rates experienced in recent years.”
The bank also warned that profit before tax is expected to be around 8% lower than 2004 but blamed this on changes in the timing of income and expense recognition, the reclassification of certain securities from equity to debt and the impact of discounting on levels of loan loss impairment.
Meanwhile, Lloyd TSB says its subsidiary Scottish Widows, has made good progress following the launch of a new range of products more tailored to the branch network which has seen an upturn in unit trust and OEIC sales during the first quarter of 2005. The lender says similarly strong progress continues to be made in the distribution of life, pensions and long-term savings products through the independent financial adviser distribution.
Eric Daniels, group chief economist at Lloyds TSB says the lender is “continuing to make progress against its objective to deliver sustained earnings growth, despite signs of a slowing consumer environment and the UK and the Group is on track to deliver a satisfactory trading performance for the first half of 2005.”
But this has not reassured the stock market with Lloyds TSB’s share price dropping 1.16%, or 5.5p to 470p so far today. The announcement has also affected rivals Barclays and HBOS. Barclays shares have dropped 1.3% or 7p to 530p while shares in HBOS are down 1.12% or 9.5p to 838p.
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