Lloyds TSB predicted it would meet profit forecasts this year and grow further in 2005, sending its shares higher, despite setting aside more compensation for the mis-selling of endowment policies.
The bank said its retail bank had made progress despite "some slowdown in the demand for consumer credit". It managed to boost lending, though that was partly offset by lower margins. But the pace of the margin decline had slowed from the first half, the bank said in a trading statement.
Eric Daniels, the chief executive, said: "Despite the slowdown in growth in demand for consumer credit, we are continuing to make progress against our objective to deliver sustained earnings momentum. Capital ratios remain strong ... and the group is on track to make further earnings progress in 2005 and beyond."
Lloyds said it would set aside an extra £110m this year to compensate customers sold endowment products in the past. Many mortgage endowment customers have been seeking compensation after facing shortfalls when stock markets fell. Despite the provision, Lloyds expects to report earnings "broadly in line" with market expectations of £3.3bn in pre-tax profits this year.
The bank expects the new accounting standards that take effect next year to reduce earnings, both before and after goodwill, by less than 5 per cent.
Its shares closed 15p higher at 443p.Reuse content