SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
08 June 2007
LLOYDS TSB GROUP plc
(Translation of registrant's name into English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F..X..Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes .....No ..X..
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule
12g3-2(b): 82- ________
Index to Exhibits
Item
No. 1 Regulatory News Service Announcement, dated 08 June 2007
re: Trading Statement
71/07 8 June 2007
LLOYDS TSB - TRADING UPDATE
Lloyds TSB Group plc will be holding discussions with analysts and investors
ahead of its close period for the half-year ending 30 June 2007. This statement
sets out the information that will be provided at those discussions.
Lloyds TSB has continued to make strong progress in the first half of 2007 and
expects to deliver a good trading performance and accelerated profit momentum.
We have continued to extend the reach and depth of our customer relationships,
achieving good sales growth throughout the organisation, whilst improving
productivity and efficiency. This has led to revenue growth remaining well
ahead of cost growth. In addition, credit quality remains satisfactory. As a
result, we expect to deliver double digit growth in profit before tax, earnings
per share and economic profit, before volatility, in the first half of 2007,
compared to the first half of 2006.
Continued progress in UK Retail Banking
The Retail Bank continues to make good progress, with further strong growth in
product sales, and continued good revenue growth in the first half of 2007. We
continue to increase our market share of new current account customers, and have
been successful in increasing our share of the added value current account
market. We have also delivered a good performance in the growing savings and
investment market, especially in bank savings and bancassurance, although
consumer demand for unsecured lending has remained subdued. In mortgages, the
Group has continued to maintain high levels of asset quality by focusing largely
on the prime UK mortgage market. Our overall market share of net new mortgage
lending in the first half of 2007 is expected to be broadly in line with our
outstanding stock position.
Good sales growth in Insurance and Investments
In Insurance and Investments, we have continued to achieve good levels of sales
growth in life, pensions and long-term savings, particularly in the
bancassurance channel. Sales of protection products have been strong following
the launch of the Group's new protection platform 'Protection for Life' in the
second half of 2006. New business margins remain robust. In General Insurance,
we have delivered improved home insurance sales and good cost control, although
there has been an increase in weather related claims.
Good trading momentum in Wholesale and International Banking
In Wholesale and International Banking, good trading momentum has been
maintained with continued strong growth in Corporate Markets and Commercial
Banking. In Corporate Markets, we have continued to develop new revenue streams
in areas such as securitisation, structured credit and credit loan trading, and
this has led to increased cross-selling revenues. In Commercial Banking, we
have maintained our market leading share of new business start-ups, as well as
increasing the number of customers switching to Lloyds TSB from other financial
services providers. Revenue growth continues to exceed cost growth despite
income pressure in the Asset Finance consumer businesses, reflecting lower
levels of consumer demand and the tightening of credit criteria, and further
investment in our higher growth businesses.
Strong Group cost performance
The Group's strong cost performance has continued, resulting in a further
substantial improvement in the Group's cost:income ratio. The Group's programme
of efficiency improvements is progressing well and we continue to expect to
deliver net benefits of approximately GBP125 million in 2007.
Overall credit quality remains satisfactory
Overall, Group asset quality remains satisfactory and we expect the Group's
impairment charge as a percentage of average lending for the half-year to be
lower than in the first half of last year.
During the first quarter of 2007, we saw a reduction in the level of
bankruptcies and Individual Voluntary Arrangements (IVAs), compared to the
fourth quarter of 2006. The quality of new unsecured lending has continued to
be strong and our arrears and delinquency trends have remained good. In
addition, the asset quality in our mortgage portfolio has remained excellent.
The retail impairment charge for the first half of 2007 is expected to be
broadly flat, compared to the charge in the first half of 2006.
In Wholesale, corporate and small business asset quality has remained strong
with no signs of deterioration in the overall quality of our lending. The
quality of business remains good, and the level of corporate provisions is
expected to remain relatively low during 2007, albeit at a higher level than
last year, largely as a result of lower releases and recoveries.
Capital ratios remain robust
The Group's capital ratios remain robust and the annualised rate of
risk-weighted asset growth in the first half of 2007 is expected to be in our
targeted mid-to-high single digit range. This has been supported by the Group's
continued move towards an 'origination and distribution' model of balance sheet
management. During May 2007, we completed a residential mortgage-backed
securitisation (RMBS) of GBP3.1 billion. The capital position of Scottish
Widows remains strong and we repatriated a further GBP400 million of surplus
capital to the Group during the first quarter of 2007.
Wholesale and International Banking restructure
We have recently re-aligned the Wholesale and International Banking
organisational structure to better meet customer needs and improve efficiency.
Customers with turnover between GBP2 million and GBP15 million per annum have
moved from Corporate Markets to Business Banking, which has been renamed
Commercial Banking. Our asset-backed lending business is now also part of
Commercial Banking, thus combining the considerable relationship and product
expertise within our teams to serve our customers better. The attached appendix
sets out how the 2006 profit before tax analysis, by business unit, would have
been reported under this new reporting structure, which was adopted with effect
from 1 January 2007. There has been no change to the division's profit before
tax in 2006 of GBP1,640 million.
Sale of Lloyds TSB Registrars
In May 2007, the Group agreed the sale of the business and assets of Lloyds TSB
Registrars to Advent International for a total cash consideration of GBP550
million, subject to completion and other adjustments. Lloyds TSB Registrars
contributed GBP32 million to Group profit after tax in 2006 and had gross assets
of approximately GBP85 million as at 31 December 2006. The transaction is
expected to be completed in the second half of 2007 and is subject to regulatory
approval. Subject to completion and other adjustments, it is expected that a
profit before tax of circa GBP440 million (tax:GBPnil) will be recognised in the
income statement of Lloyds TSB Group in the second half of the year ending 31
December 2007.
Continuing to build our strong customer franchises and delivering on our
financial goals
Eric Daniels, Group Chief Executive, said "In addition to delivering our
short-term financial goals, we are continuing to build and enhance our long-term
customer franchises throughout the Group. By doing so, we believe that we can
deliver sustained double digit economic profit growth over time. The Group
remains firmly on track to deliver a good trading performance for the first half
of 2007 and, as we look to the future, we are increasingly confident in the
Group's earnings growth prospects."
Trading update webcast details
The Group Finance Director's briefing will be available as a live audio webcast
on the Investor Relations website at www.investorrelations.lloydstsb.com and a
recording will be posted on the website shortly after the briefing.
Timetable
2007 interim results announcement 31 July 2007
Ex-dividend date 8 August 2007
Interim dividend record date 10 August 2007
Interim dividend payment date 3 October 2007
All dates are provisional and subject to change.
For further information:-
Investor Relations
Michael Oliver +44 (0) 20 7356 2167
Director of Investor Relations
E-mail: michael.oliver@ltsb-finance.co.uk
Media
Mary Walsh +44 (0) 20 7356 2121
Director of Corporate Relations
E-mail: mary.walsh@lloydstsb.co.uk
FORWARD LOOKING STATEMENTS
This announcement contains forward looking statements with respect to the
business, strategy and plans of the Lloyds TSB Group and its current goals and
expectations relating to its future financial condition and performance.
Statements that are not historical facts, including statements about Lloyds TSB
Group's or management's beliefs and expectations, are forward looking
statements. By their nature, forward looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future. Lloyds TSB Group's actual future results may differ
materially from the results expressed or implied in these forward looking
statements as a result of a variety of factors, including UK domestic and global
economic and business conditions, risks concerning borrower credit quality,
market related risks such as interest rate risk and exchange rate risk in its
banking businesses and equity risk in its insurance businesses, inherent risks
regarding changing demographic developments, catastrophic weather and similar
contingencies outside Lloyds TSB Group's control, any adverse experience in
inherent operational risks, any unexpected developments in regulation or
regulatory actions, changes in customer preferences, competition, industry
consolidation, acquisitions and other factors. For more information on these
and other factors, please refer to Lloyds TSB Group's Annual Report on Form 20-F
filed with the US Securities and Exchange Commission and to any subsequent
reports furnished by Lloyds TSB Group to the US Securities and Exchange
Commission or to the London Stock Exchange. The forward looking statements
contained in this announcement are made as of the date hereof, and Lloyds TSB
Group undertakes no obligation to update any of its forward looking statements.
Appendix 1
Wholesale and International Banking
Restated profit before tax by business unit
2006 H1
Wholesale and
Corporate Commercial International International
Markets Banking Asset Finance and other Banking
GBPm GBPm GBPm GBPm GBPm
Net interest income 413 398 275 108 1,194
Other income 314 193 153 145 805
Total income 727 591 428 253 1,999
Operating expenses (271) (349) (250) (202) (1,072)
Trading surplus 456 242 178 51 927
Impairment losses on loans and 5 (47) (115) (2) (159)
advances
Profit before tax 461 195 63 49 768
2006 H2
Wholesale and
Corporate Commercial International International
Markets Banking Asset Finance and other Banking
GBPm GBPm GBPm GBPm GBPm
Net interest income 393 423 264 111 1,191
Other income 507 204 168 143 1,022
Total income 900 627 432 254 2,213
Operating expenses (344) (378) (258) (212) (1,192)
Trading surplus 556 249 174 42 1,021
Impairment losses on loans and 13 (46) (124) 8 (149)
advances
Profit before tax 569 203 50 50 872
2006
Wholesale and
Corporate Commercial International International
Markets Banking Asset Finance and other Banking
GBPm GBPm GBPm GBPm GBPm
Net interest income 806 821 539 219 2,385
Other income 821 397 321 288 1,827
Total income 1,627 1,218 860 507 4,212
Operating expenses (615) (727) (508) (414) (2,264)
Trading surplus 1,012 491 352 93 1,948
Impairment losses on loans and 18 (93) (239) 6 (308)
advances
Profit before tax 1,030 398 113 99 1,640
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LLOYDS TSB GROUP plc
(Registrant)
By: M D Oliver
Name: M D Oliver
Title: Director of Investor Relations
Date: 08 June 2007