Lloyds TSB profit up seven per cent, retail bad debts up

Lloyds TSB Group's first-half profit rose seven per cent, boosted by growth in corporate and business banking, but retail banking customers are struggling to repay loans, the bank said.

Pretax profit for the six months ended June 30 rose to £1.676 billion from £1.568 billion a year earlier, Britain's fifth-biggest bank said in a statement.

Analysts had forecast profit of about £1.71 billion in a range of £1.63 billion to £1.83 billion, although estimates are a rough guide because of a change to new IFRS accounting rules.

The bank said the retail banking loan impairment charge rose 21 per cent in the first half, partly because customers were having difficulty repaying. Overall credit quality was satisfactory, the bank added.

Retail banking profit rose 3.75 per cent to £830 million, while profit from wholesale and international banking rose 14 per cent to £662 million.

Lloyds TSB shares fell 0.4 per cent last week to 489 pence. The shares have risen 3.4 per cent this year, making the stock the fifth-best performer of Britain's 10 listed banks.

The bank said it remained strongly capitalised and the first-half dividend was unchanged at 10.7 pence a share.