However, the news failed to allay union fears about job cuts in the wake of the merger in late 1995 between Lloyds and TSB. Noel Howell of the banking union Bifu said the profit sharing might only be a one-off, which would not increase employees pensionable salary. "They are going to have to go further than that and the key issue is job security." Bifu claims 10,000 jobs and 650 branches are at risk.
The Bill to enable the merger legally to go ahead will have its second reading in early March and the union is lobbying Parliament to include a requirement that local communities are consulted before branches close.
Lloyds axed 4,200 jobs last year and Sir Brian Pitman, who this month became chairman of the bank, defended the cuts. "We get new competitors arriving every week. You only keep jobs by winning", he said. Lloyds warned that further job cuts were in prospect this year.
Sir Brian was speaking as Lloyds unveiled the first full-year results of the combined businesses of Lloyds, TSB and the former Cheltenham & Gloucester building society, acquired for pounds 1.7bn in 1995. Pre-tax profits leapt from pounds 1.65bn to pounds 2.51bn in the 12 months to December, in line with analysts' expectations, although a final dividend of 9p, taking the total to 13.2p, was slightly better than forecast.
Sir Brian said he was aiming to "benchmark" Lloyds against the best companies in America, including Coca-Cola and General Electric. "By benchmarking with these companies, we have raised our standards. We have shot from a higher level than ever before." As part of this, Lloyds has introduced a new measure of its performance, "economic profits", which attempts to factor in the risk-weighted cost of capital, put at 10.1 per cent for the bank. This showed profits rising 69 per cent to pounds 1.06bn last year.
Lloyds said it was setting aside an additional pounds 39m to cover claims following the 1994 pensions "misselling" scandal, taking its total provision to pounds 200m.