Lloyds TSB earmarks pounds 1bn for acquisitions as profits soar again
Saturday 02 August 1997
Sir Brian was speaking after Lloyds TSB announced record interim profits of pounds 1.5bn, a third higher than the pounds 1.1bn achieved in the first six months of 1996. Thanks to the recent acquisition of the minority shareholding in its Lloyds Abbey Life insurance operation, earnings per share rose even more quickly, up 49 per cent to 20.4p.
The bank's shares soared 60.5p to 736p as the market digested the results, which were at the top end of expectations, and a 26 per cent jump in the half-time dividend to 5.3p. Analysts focused on a sharp rise in the bank's return on equity to 40.4 per cent, driven, Sir Brian said, by rising income and a continuing fall in the bank's costs.
Lloyds TSB has been one of the biggest beneficiaries of the market's upward re-rating of the financials sector over the past year. The bank's shares traded at just 315p at the end of June 1996, less than half their current level. The market value of Lloyds TSB has risen during that period from pounds 16bn to almost pounds 40bn.
The ratio of costs to income at Lloyds TSB fell from 57.7 per cent a year ago to 51.1 per cent and Peter Ellwood, chief executive, said he would be disappointed if that proportion did not fall further as the full benefits of 1995's merger with TSB flowed through. He added that the combined group was well on track to achieving the pounds 400m of savings it had promised by 1999.
Asked whether Lloyds TSB's acquisition ambitions might include an investment bank, Sir Brian retorted: "not a hope. I wouldn't touch one with a barge- pole." Unlike its high street rivals Barclays and NatWest, Lloyds has long espoused a focus on retail banking where it has been able to earn high returns without the perceived volatility of investment banking.
Retail financial services produced the lion's share of first half profits, pounds 962m compared with pounds 794m a year ago. Profits from mortgages were 18 per cent higher at pounds 293m, while retail banking rose 44 per cent to pounds 441m. Although slightly lower at pounds 228m (pounds 239m), the insurance result included a pounds 50m provision to cover the rising cost of the pensions mis-selling scandal, bringing the total set aside to pounds 250m.
Mr Ellwood said Lloyds was spending pounds 100m on its computer systems and he was confident Lloyds' systems would be "millennium-proofed" by the end of 1998.
peopleContenders for Time magazine's Person of the Year are a mixture of the good, the bad and the holy
tvSteven Moffat reveals the actor was dying to take on the role of the Time Lord and says he is excited to see what he will do with the character
sportBayern Munich 2 Manchester City 3: City come from two down to beat reigning European Champions
newsAs the world remembers Mandela the hero, the prison where he spent 27 years seems all the more brutal
arts + ents... and a chance to paint Booker Prize winning author Hilary Mantel
danceUnder Tamara Rojo's inspired direction, it seems possible that it could challenge the dominance of the Royal Ballet. We meet some established names and rising stars
travelDiscover Uruguay's jet-set beach resort, an Atlantic enclave with plenty of art and culture to explore on the side
The ten coldest places on Earth
Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Nelson Mandela memorial: Cheers, jeers and a masterclass from Barack Obama that stole the show
- 1 Mountain goats' miraculous escape from avalanche captured in dramatic video footage
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
- 4 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 5 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- < Previous
- Next >
iJobs Money & Business
£45000 - £70000 per annum + Bonus + Benefits: Harrington Starr: Technical Impl...
£65000 - £90000 per annum + Bonus + Benefits: Harrington Starr: Rogue Trading ...
£35000 - £45000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...
£40000 - £50000 per annum + benefits + bonus: Harrington Starr: Data Analyst -...