Loyds TSB sells Abbey Life and increases profit

by Gill Montia

Story link: Loyds TSB sells Abbey Life and increases profit

Lloyds TSB, the UK’s fifth-largest bank, has recorded a 13% increase in retail banking profit in the first-half of 2007.

Costs during the period increased by a very satisfactory 6%, given that 4% of the increase was incurred 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 remainder of 2007 to produce similar growth and has also revealed that its spending for the year so far in refunding fees for unauthorised overdrafts amounts to £36 million.

This compares favourably with the HSBC figure of £115 million for the same period, particularly as Lloyds has the larger UK retail customer base.

Lloyds’ customers may not be as impressed with the figure as its shareholders, as the bank has been accused of taking a harsher approach than some of its competitors when settling claims for unreasonable charges.

The bank has also sold Abbey Life, its closed life insurance business, for £977m. 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 will make an estimated £290 million profit when the transaction is completed later this year.