Final Results - Pre-tax Profit Up 20%, Part 1

Lloyds TSB Group PLC
11 February 2000



PART 1

LLOYDS TSB GROUP

                                                11 February 2000

                      LLOYDS TSB GROUP plc

                     1999 RESULTS HIGHLIGHTS
                                

Results - statutory basis

Profit  before tax up 20 per cent to £3,621  million  from
£3,015 million.

Income up 11 per cent to £7,872 million.

Economic profit increased by 25 per cent to £1,772 million.

Earnings per share increased by 18 per cent to 46.2p.

Total capital ratio further strengthened to 15.1 per cent;
tier 1 capital ratio to 10.0 per cent.

Final dividend of 18.5p per share, making a total of 26.6p
for the year, an increase of 20 per cent.


                                
Results - excluding the impact of pension provisions and the
loss/profit on the sale and closure of businesses.
                                
Profit  before tax up 16 per cent to £3,849 million from  £3,331
million.

Income up 7 per cent to £7,974 million.

Operating expenses reduced by 3 per cent.

Trading surplus up 15 per cent to £4,601 million.

Efficiency ratio further improved to 42.3 per cent from 46.4 per
cent.

Economic profit increased by 22 per cent to £1,968 million.

Earnings per share up 16 per cent to 49.8p.

Post-tax return on shareholders' equity 32.9 per cent.

UK  Retail Financial Services profit up £298 million, or 13  per
cent,  to  £2,670 million, representing   69 per cent  of  total
group profit.

The  Group announced an agreement with Scottish Widows providing
for  the transfer of Scottish Widows' business to the Lloyds TSB
Group.

Commenting on the results Lloyds TSB Group chairman,  Sir  Brian
Pitman, said:-

1999  was another successful year for the Lloyds TSB Group, with
record  profits and earnings per share.  This strong performance
enables  the  board to recommend a final dividend of  18.5p  per
share, making a total of 26.6p for the year, an increase  of  20
per  cent.   This is covered 1.7 times by earnings and  reflects
the  confidence of the board in the prospects for the Group  and
the continued strong internal generation of capital.
                          Page 1 of 42
LLOYDS TSB GROUP

                    PRESENTATION OF RESULTS

In 1998 two factors had a significant impact on Lloyds TSB 
Group's results on a statutory basis: the provision for 
redress to past purchasers of pension policies and the disposal
of a number of businesses.  In order to facilitate comparisons 
at that time, certain financial information and commentaries
were presented on a Continuing Businesses basis which excluded
the effect of these factors.

In 1999 the impact of these issues was less significant and the
Group's results have therefore been presented on a statutory
basis.  In addition, the impact of pension provisions and the
sale and closure of businesses has been excluded, where
appropriate, from commentaries and figures to facilitate
performance comparisons.

                       SUMMARY OF RESULTS
                                
                                                       
                                  1999        1998     Increase
                                                       (Decrease)
RESULTS (statutory basis)          £m           £m        %
                                                       
Total income                    7,872        7,078       11
Operating expenses              3,373        3,472       (3)
Trading surplus                 4,499        3,606       25
Provisions for bad and doubtful   
debts                             588          528       11
Profit before tax               3,621        3,015       20
Profit attributable to          
shareholders                    2,514        2,120       19
Economic profit (page 38, note  
2)                              1,772        1,417       25
                                                       
RESULTS (excluding pension         £m           £m     
provisions and loss/profit on
sale and closure of
businesses)
                                                       
Total income                    7,974        7,478        7
Operating expenses              3,373        3,472       (3)
Trading surplus                 4,601        4,006       15
Provisions for bad and doubtful  
debts                             588          528       11
Profit before tax               3,849        3,331       16
Profit attributable to                         
shareholders                    2,711        2,316       17
Economic profit                 1,968        1,617       22
                                                       
PER SHARE                           p           p      
                                                       
Earnings (statutory basis)       46.2         39.3       18
Earnings (excluding pension                            
provisions and loss/profit on    
sale and closure of
businesses)                      49.8         42.9       16
Net assets                        157          136       15
                                                       
SHAREHOLDER VALUE                                      
                                                       
Closing market price per share   774p         855p       (9)
Total market value of                           
shareholders' equity          £42.4bn      £46.5bn       (9)
Dividends per share             26.6p        22.2p       20
                                                       
PERFORMANCE MEASURES                %           %      
                                                       
Post-tax return on average                             
shareholders' equity             
(statutory basis)                30.5        30.2
Post-tax return on average                             
shareholders' equity                       
(excluding pension provisions    
and loss/profit on sale and
closure of businesses)           32.9        33.2
Post-tax return on average          
assets*                          1.70        1.53
Post-tax return on average risk-     
weighted assets                  3.02        2.67
                                                       
BALANCE SHEET                      £m          £m      
                                                       
Shareholders' equity            8,693       7,475      16
Total assets                  176,091     167,997       5
                                                       
RISK ASSET RATIOS                   %           %      
                                                       
Total capital                    15.1        11.3      
Tier 1 capital                   10.0         8.7      
* Assets exclude long-term assurance assets attributable to
policyholders.
                                
                          Page 2 of 42
LLOYDS TSB GROUP

           GROUP CHIEF EXECUTIVE'S SUMMARY OF RESULTS
                                
We  continue to pursue the Group's three strategic aims to be  a
leader  in  our  chosen  markets, to be  first  choice  for  our
customers  and  to  drive down day-to-day operational  costs  to
enable  us to further invest in the business.  Whilst  this  has
not  been reflected in our share price during the year,  by  the
end  of  1999  the  Group's total shareholder return  since  the
merger of Lloyds Bank and TSB Group four years ago had grown  by
27  per cent per annum, equivalent to doubling shareholder value
every  three years.  During this time our share price has  risen
134 per cent.

Our  business  continued  to make very good  progress  in  1999.
Profit  before tax on  a  statutory   basis   (page 8)  rose  by
£606  million,  or  20 per cent, to £3,621 million  from  £3,015
million in 1998, which included a £400 million pension provision
and disposal gains totalling £84 million.  1999 figures included
a  further  pension  provision of £102 million,  a  £28  million
provision for the closure of Lloyds TSB Securities Services, and
a  provision  of  £98 million for the sale of the  new  business
capability of Abbey Life.  Economic profit increased by  25  per
cent  to £1,772 million (page 38, note 2) and earnings per share
increased  by  18  per cent to  46.2p.  The post-tax  return  on
average  shareholders' equity was 30.5 per  cent,  the  post-tax
return  on assets improved to 1.70 per cent from 1.53  per  cent
and  the post-tax return on average risk-weighted assets, a  key
measure  of the efficient use of capital, improved to  3.02  per
cent,  up  from 2.67 per cent in 1998 (page 32).   Total  income
rose  by  11  per  cent  while operating expenses  were  further
reduced by 3 per cent, producing a 25 per cent increase  in  the
trading  surplus  to  £4,499  million.   Customer  lending   and
deposits   continued   to   grow   and,   despite   intensifying
competition, the net interest margin held up well  at  3.86  per
cent.

Excluding  the  impact of pension provisions and  the  sale  and
closure  of businesses, profit before tax rose by £518  million,
or  16  per cent, to £3,849 million from £3,331 million in 1998.
Total income increased by 7 per cent and there was a 15 per cent
increase  in the trading surplus.  The efficiency ratio improved
further  to 42.3 per cent from 46.4 per cent in 1998 (page  27).
Shareholders' equity increased by 16 per cent (page 10),  profit
attributable  to  shareholders increased  by  17  per  cent  and
economic  profit increased by 22 per cent.  The post-tax  return
on average shareholders' equity was 32.9 per cent.

Underlying  operating  expenses (page  28)  have  reduced  by  a
further £66 million bringing total costs saved since the  merger
of Lloyds Bank and TSB Group and the integration of Lloyds Abbey
Life  to   £417   million  per  annum,  exceeding  the   £400
million   per  annum  cost  reduction  target.   Although   this
reduction  in  our  costs  compared  to  the  1995  base  is   a
significant   achievement,  giving  Lloyds  TSB   an   important
competitive  advantage,  competition in the  financial  services
market  is  now  so  fierce that we must continuously  drive  to
improve  our operating efficiency whilst continuing to grow  our
revenues.

In  December  1999 we announced a revised Group structure  based
upon  delivering  a  stronger customer focus to  strengthen  the
continuous drive for revenue growth and further improvements  in
efficiency.  We will continue to invest heavily in improving our
services  to customers to help deliver our extensive  plans  for
revenue   growth,   and  we  have  also  identified   additional
opportunities  to reduce further our operating costs.   We  have
now  begun  a  major  new  efficiency  programme  and  the  cost
reductions  from  this  programme, together  with  the  expected
revenue growth, are such that by 2002 we expect that the Group's
efficiency  ratio  will be below 35 per cent,  and  we  forecast
further  progress  thereafter.  The  start  of  this  efficiency
programme  will require a restructuring charge  of  up  to  £200
million in 2000 (page 39, note 6).
                                
                          Page 3 of 42
LLOYDS TSB GROUP

The total charge for bad and doubtful debts (page 30) was 11 per
cent higher at £588 million, compared with £528 million in 1998.
The  domestic charge increased to £501 million, largely  due  to
some  deterioration  at the beginning of 1999  in  the  personal
lending and credit card portfolios and higher provisions in  our
asset finance business, Lloyds UDT, mainly as a result of higher
arrears  and  the decline in the residual value  of  second-hand
cars.   Provisions overseas decreased to £87 million  from  £165
million mainly as a result of a lower provisions charge from the
Losango consumer finance business in Brazil.  The Group's charge
for bad and doubtful debts, expressed as a percentage of average
lending,  was 0.57 per cent compared to 0.56 per cent  in  1998.
At the end of the year specific provisions for bad debts for the
Group totalled £1,762 million, representing over 160 per cent of
non-performing loans (1998: 150 per cent).

Excluding the impact of pension provisions and the sale  of  the
new business capability of Abbey Life, profit before tax from UK
Retail  Financial  Services (page 13),  encompassing  UK  Retail
Banking, Mortgages, and Insurance and Investments, increased  by
£298   million,  or  13  per  cent,  to  £2,670  million.   This
represents  69  per  cent of total group profit  (1998:  71  per
cent).

  Pre-tax profit from UK Retail Banking (page 14) rose by £77
  million, or 11 per cent, to  £761 million.  Growth
  in revenue of 7 per cent and tight control of costs was partly
  offset by increased bad debts.

  Pre-tax profit from Mortgages (page 15) increased by  £163
  million,  or  22 per cent, to £903 million.  In  the  face  of
  aggressive competition during 1999, C&G was able to achieve an
  estimated  market share of net new lending of  7.5  per  cent,
  whilst   substantially  increasing  its  profitability.    The
  efficiency ratio of the Group's total mortgage business further
  improved to 21.9 per cent, from  24.5 per cent in 1998.

  Pre-tax  profit from Insurance and Investments (page  16),
  rose by £58 million, or 6 per cent, to £1,006 million, from £948
  million.   Strong  revenue  growth in  the  general  insurance
  business offset a reduction of £27 million in profit before tax
  from our life and pensions businesses.  Underlying profits  in
  the  life and pensions businesses, however, increased  by  £13
  million from £401 million in 1998 to £414 million in 1999 (page
  17).

In Wholesale Markets (page 20), profit before tax, excluding the
write-down  of  finance  leases in  1998  and  the  £28  million
provision  in  1999  for  the closure of Lloyds  TSB  Securities
Services,  was  £70  million, or 10 per  cent,  higher  at  £799
million.   Total  revenue increased by  4  per  cent  to  £1,437
million  and,  as a result of lower costs in both  Treasury  and
Corporate and Institutional Banking, operating expenses fell  by
9  per cent to £555 million, producing a 15 per cent increase in
the trading surplus.

In  International Banking (page 21), profit before tax  was  £86
million  higher  at  £434 million compared with  1998.   In  New
Zealand  we  started  to  see  the benefits  of  the  successful
integration  of Countrywide Bank and The National  Bank  of  New
Zealand  and  profits were also up in the international  private
banking and offshore banking operations.  Profits from our Latin
American  businesses  held  up well despite  difficult  economic
conditions and our consumer finance business in Brazil, Losango,
made  a pre-tax profit of £31 million compared with a profit  of
£5 million in 1998.
                                
                                
                          Page 4 of 42
LLOYDS TSB GROUP

On  23 June 1999, the Group announced an agreement with Scottish
Widows  providing for the transfer of Scottish Widows'  business
to  the  Lloyds  TSB Group.  The transfer has been  approved  by
Scottish  Widows  members and, subject to the  sanction  of  the
Court  of Session in Edinburgh, the transfer is expected  to  be
completed  on  schedule on 3 March 2000.   The  results  of  the
Scottish  Widows  business  will be consolidated  in  full  with
effect  from  3  March  2000, however in  order  to  provide  an
indication  of  the historic performance of the enlarged  Group,
pro forma financial information is shown on pages 34 to 37.

Completion  of the proposed transaction will bring together  the
life,  pensions,  unit trust and fund management  businesses  of
Lloyds TSB and Scottish Widows and create a business capable  of
achieving greater sales, increased revenue growth and lower unit
costs.   This  is a further manifestation of one of the  Group's
strategic aims to become a leader in its chosen markets, and the
addition of Scottish Widows to the Lloyds TSB Group will  enable
the  Group  to achieve this aim in the rapidly growing long-term
savings  and  pensions market.  It will bring  to  the  Group  a
powerful  and leading brand, and expertise and presence  in  the
important Independent Financial Adviser market.

On  1  February  2000 the Group announced the sale  of  the  new
business  capability  of Abbey Life to Allied  Dunbar  for  £100
million, of which £20 million is conditional upon the salesforce
achieving agreed sales targets over the next two years.  In  the
future,  Abbey Life will focus on providing an efficient service
to  its existing 1.5 million customers and the only new business
that  will  be  undertaken will be in relation to  increases  to
existing  plans.  The value of the in-force business,  which  is
being  retained by Lloyds TSB, was £1.2 billion at  the  end  of
December 1999.  In 1999 the new business profitability of  Abbey
Life  was  £11 million and the disposal is likely to be earnings
neutral for the Group.  A provision of £98 million has been made
in  the  1999  accounts  for  the expected  loss  on  the  sale,
including £80 million in respect of goodwill previously  written
off to reserves, and other asset write-offs.

In  June  1999  the national roll-out of the single  Lloyds  TSB
brand  was  completed following the enactment of the Lloyds  TSB
Act  1998.   This brought together over 2,300 former Lloyds  and
TSB  branches  under  the  Lloyds TSB  name  and  has  laid  the
foundations for the generation of increased revenue growth  from
higher  sales,  increased cost effectiveness from  a  simplified
branch  network and the move towards a single IT  platform,  and
material service enhancements for our customers.

We   have   continued  to  develop  a  number   of   alternative
distribution  channels in order to offer the  broadest  possible
range  of  access points for our customers in order  to  improve
service and to enhance revenue growth.  PhoneBank, our telephone
banking  operation,  is one of the largest in  Europe  with  1.6
million customers.  It handled some 19 million calls during  the
year and was further enhanced with the launch, in March 1999, of
PhoneBank  Express which incorporates leading  edge  interactive
voice  recognition  systems.  PhoneBank  Express  now  has  some
500,000  registered  users.  Our supermarket banking  operation,
branded  easibank, continues to expand  and  we  now  have  17
branches in ASDA stores or large shopping centres.

Our   Internet  Banking  Service  has  some  160,000  registered
customers  and  we anticipate that by the end of the  year  2000
some  1 million customers will be registered to use the service.
In  addition,  in  October  1999, we launched  a  free  Internet
Service  Provider to give Gold Service customers  free  internet
access,   e-mail, and access to a range of on-line services  and
products.  In March 1999 we successfully launched a new Internet
Banking Service for business customers.

                          Page 5 of 42
LLOYDS TSB GROUP

The  impact  of  e-commerce is considerably  greater  than  just
internet    banking    and   the   Group's      e-commerce
strategy  is  being further developed on the basis of  four  key
themes.   First, during 2000 we shall be further  enhancing  our
current  Internet  Banking Service to UK personal  customers  by
expanding our on-line capabilities.  Second, we plan to launch a
stand  alone  pan-European internet bank  focused  initially  on
Spain,  with  the  objective of obtaining  1  million  customers
within 3-4 years, and it is our intention to introduce a similar
stand alone internet bank in the UK towards the end of the year.
Third,  we  shall  be  launching a range of  trade  facilitation
(business   to  business)  services  to  assist  our  corporate,
commercial  and small business customers.  Finally, we  plan  to
make greater use of internet technology to redesign our internal
operating processes, to improve customer service and efficiency,
and to realise significant cost savings over time.

In  March 1999 the Group announced an agreement with Post Office
Counters Limited that allows personal customers of Lloyds TSB to
carry  out  straightforward banking transactions at over  15,500
post  offices  in  England and Wales.   This  is  a  significant
enhancement  to  our  customer  service,  allowing  Lloyds   TSB
customers  access  to deposit and withdrawal  services  in  many
areas where we are not represented.

The  total capital ratio (page 32) further strengthened to  15.1
per  cent  and the tier 1 capital ratio increased  to  10.0  per
cent.   This  reflects  both the strong internal  generation  of
capital   and  the  raising of  some   £2.4  billion  of  loan
capital in anticipation of the completion of the Scottish Widows
acquisition.   Balance sheet assets (page  9)  increased  by  £8
billion, or 5 per cent, to £176 billion, largely as a result  of
further  growth in mortgages and other customer lending.   Risk-
weighted assets (page 32) increased to £84.2 billion from  £83.3
billion at the end of 1998.

Staff eligible to participate in the staff profit sharing scheme
will receive 10.5 per cent of basic salary (1998: 9.5 per cent).
The total payment will be £104 million (1998: £93 million).

The  four  Lloyds  TSB Foundations support registered  charities
throughout the UK that enable people, particularly disabled  and
disadvantaged  people, to play a fuller role  in  society.   The
Foundations  receive  1 per cent of the Group's pre-tax  profit,
averaged  over  3  years,  instead  of  the  dividend  on  their
shareholdings.  In 2000 they will receive £31 million (1999: £27
million)  to  distribute to charities, making them in  aggregate
one of the largest general grant-giving organisations in the UK.

Outlook

1999  saw  a great deal of progress made on our three  strategic
aims, but significant opportunities lie ahead.

Our first strategic aim is to be a leader in our chosen markets.
The  acquisition  of  Scottish Widows will greatly  enhance  our
market  position in the life assurance business.   The  combined
business  will  immediately make Lloyds TSB the  second  largest
life assurance and pensions provider in the UK.

Our  second  strategic  aim  is  to  be  first  choice  for  our
customers.   We  have a product range which is more  competitive
than  ever  before  and,  augmenting  our  comprehensive  branch
network,  we have continued to extend our telephone banking  and
internet  banking operations during the year.  We aim  to  offer
our  customers the widest possible choice of when, where and how
they  want  to transact their financial business, be it  at  the
branch, over the telephone or through the internet.  The  extent
and  range of ways by which we serve our customers is second  to
none.


                          Page 6 of 42
LLOYDS TSB GROUP

We   need  constantly  to  improve  our  understanding  of   our
customers'  needs and to be able to respond to those  needs.  We
have invested heavily in systems which help us to do this and we
have  put this information to good use in 1999.  Our aim  is  to
become  world class in the management of our relationships  with
our customers.  It is only by satisfying our customers needs and
earning  their  trust  by  offering  first  class  products  and
excellent  service  that we will gain the privilege  of  looking
after  more  of  their  business, leading  to  improved  revenue
growth.   This will remain the focus of our attention.   In  the
meantime   we   will   continue  to  seek  further   acquisition
opportunities both in the UK and overseas.

Strong   revenue  generation  remains  at  the  heart   of   our
strategies,  but being the lowest cost provider of services  and
products is also a key measure of a company's ability to  obtain
and  sustain competitive advantage.  Our third strategic aim  is
to  drive  down our day-to-day operating costs so that  we  will
have  more resources to reinvest in the business to improve  our
services  and  products.  1999 saw the successful attainment  of
the  £400 million per annum cost saving target we promised as  a
result  of  the  merger of Lloyds Bank and TSB  Group,  and  the
integration of Lloyds Abbey Life.  We are committed to build  on
past  success and to bring about further reductions in the early
years  of  the  new millennium, whilst at the same time  further
investing in business growth.  The new efficiency programme will
help to achieve this.

The  core  fundamentals  of  our business  remain  strong:  1999
produced  another record year of good quality  earnings  and  we
anticipate  that Scottish Widows will join the  Group  in  March
2000  to  further enhance the Group's revenue growth  prospects.
As  we  strive  to improve the Group's competitive advantage  by
focusing  on our three strategic aims, we expect to continue  to
make  strong  progress this year, particularly in  our  core  UK
Retail  Financial Services business, by further  developing  our
strengths  in customer relationship management and by  expanding
the Group's e-commerce strategy.

The  quality of our earnings remains high, our efficiency  ratio
continues  to  improve,  revenue growth  remains  good  and,  by
focusing on our core retail strengths, we are well positioned to
continue delivering value for our customers, our staff  and  our
shareholders.




Peter Ellwood
Group Chief Executive
                                
                                
                                
                                
                                
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