British bank Lloyds TSB Group Plc yesterday said its underlying 2005 profits rose four per cent from a year earlier, boosted by a 20 per cent rise in wholesale and international banking profits.

Britain's fifth biggest bank reported 2005 pretax profit on a comparable basis of £3.47 billion, up from £3.32 billion in 2004. Analysts' forecasts were not directly comparable.

Lloyds said its UK retail banking profit after provisions fell seven per cent to £1.53 billion, as provisions for bad debts rose to £150 million from £100 million. It said consumers were having a harder time repaying unsecured loans.

Lloyds, Britain's biggest unsecured lender, said it expects a further deterioration in the retail credit environment in the first half of this year, but greater stability in the second half.

Lloyds said group costs remained under control, rising four per cent compared with income growth of seven per cent - improving the ratio of costs to income to 52.7 per cent from 54.3 per cent.

It said profits in its wholesale or business and international banking unit rose 20 per cent from a year earlier to £1.50 billion, while profits in insurance and investments after provisions rose three per cent to £798 million.

The bank said its pension deficit stood at £2.91 billion at the end of 2005 and it was considering methods of addressing the shortfall.