Interim Results-Part 3
Lloyds TSB Group PLC
28 July 2000
PART 3
LLOYDS TSB GROUP
INCOME
Group net interest income
Group net interest income decreased by £44 million, or 2 per
cent, to £2,311 million reflecting the £80 million
funding cost of Scottish Widows. Average interest-earning
assets increased by 6 per cent to £130 billion. There was
further growth in mortgages and other customer lending in the
UK. The net interest margin decreased to 3.58 per cent, a
reduction of 29 basis points. The impact of the funding cost of
Scottish Widows represented 12 basis points of this 29 basis
point reduction, with the residual 17 basis point decrease in
the margin reflecting the increasingly competitive operating
environment and a lower international net interest margin.
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Net interest income 2,311 2,355 2,428
Average balances
Short-term liquid assets 2,176 2,050 1,921
Loans and advances 120,832 116,239 117,680
Debt securities 6,838 4,553 5,515
Total interest-earning assets 129,846 122,842 125,116
Financed by:
Interest-bearing liabilities 115,909 106,471 108,772
Interest-free liabilities 13,937 16,371 16,344
Average rates % % %
Gross yield on interest-earning
assets 8.30 8.94 7.93
Cost of interest-bearing
liabilities 5.28 5.86 4.70
Interest spread 3.02 3.08 3.23
Contribution of interest-free
liabilities 0.56 0.79 0.62
Net interest margin 3.58 3.87 3.85
Note: Payments made under cash gift and discount mortgage
schemes are amortised over the early redemption charge period,
being a maximum of 5 years. If these incentives had been fully
written off as incurred, group and domestic net interest income
would have been £38 million lower in the first half of 2000
(1999: first half £16 million higher, second half £27 million
lower). The deferred element of the expenditure amounting to
£214 million at 30 June 2000 (30 June 1999: £149 million, 31
December 1999: £176 million) is included within prepayments and
accrued income in the balance sheet.
Page 24 of 39
LLOYDS TSB GROUP
Domestic net interest income
Domestic net interest income decreased by £47 million, or 2 per
cent, to £1,990 million, largely reflecting the £80 million
funding cost of Scottish Widows, and this represents 86 per cent
of total group net interest income.
Average interest-earning assets increased by 6 per cent to £109
billion. There was further growth in mortgages and other
customer lending.
The net interest margin decreased by 32 basis points to 3.68 per
cent, again partly reflecting the funding cost of Scottish
Widows, which caused a reduction of 15 basis points. In
addition, the increasingly competitive operating environment,
particularly for retail lending, and the higher cost of deposit
products in a higher average interest rate environment caused an
underlying reduction of 17 basis points in the net interest
margin. The first half of 1999 benefited from a higher number
of base rate changes.
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Net interest income 1,990 2,037 2,117
Average balances
Short-term liquid assets 820 915 1,054
Loans and advances 103,247 98,870 101,082
Debt securities 4,783 2,844 3,693
Total interest-earning assets 108,850 102,629 105,829
Financed by:
Interest-bearing liabilities 96,599 87,862 91,141
Interest-free liabilities 12,251 14,767 14,688
Average rates % % %
Gross yield on interest-earning
assets 8.02 7.81 7.57
Cost of interest-bearing
liabilities 4.90 4.45 4.18
Interest spread 3.12 3.36 3.39
Contribution of interest-free
liabilities 0.56 0.64 0.58
Net interest margin 3.68 4.00 3.97
Page 25 of 39
LLOYDS TSB GROUP
International net interest income
Net interest income from international operations increased by 1
per cent to £321 million, representing 14 per cent of total
group net interest income.
Average interest-earning assets on a local currency basis
increased by 6 per cent, helped by strong growth in our New
Zealand mortgage portfolio, but this increase was partly offset
by the effect of exchange rate movements. The international net
interest margin decreased by 10 basis points to 3.07 per cent.
The gross yield on interest-earning assets and the cost of
interest-bearing liabilities both fell significantly, from the
first half of 1999, as a result of lower interest rates in Latin
America which also caused the 41 basis point reduction in the
contribution of interest-free liabilities.
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Net interest income 321 318 311
Average balances
Short-term liquid assets 1,356 1,135 867
Loans and advances 17,585 17,369 16,598
Debt securities 2,055 1,709 1,822
Total interest-earning assets 20,996 20,213 19,287
Financed by:
Interest-bearing liabilities 19,310 18,609 17,631
Interest-free liabilities 1,686 1,604 1,656
Average rates % % %
Gross yield on interest-earning
assets 9.71 14.69 9.93
Cost of interest-bearing
liabilities 7.22 12.51 7.36
Interest spread 2.49 2.18 2.57
Contribution of interest-free
liabilities 0.58 0.99 0.63
Net interest margin 3.07 3.17 3.20
Page 26 of 39
LLOYDS TSB GROUP
Other income
Other income increased by £360 million, or 23 per cent, to
£1,955 million. This represented 46 per cent of total income.
Scottish Widows contributed £112 million of this increase.
Excluding short-term fluctuations in investment returns in our
insurance businesses and changes in the economic assumptions
applied to our long-term assurance business, other income
increased by £304 million, or 19 per cent, to £1,887 million.
Fees and commissions receivable increased by 9 per cent
reflecting increased business volumes and strong growth in
income from insurance broking. Other UK fees and commissions
increased by 16 per cent, as a result of growth in all core UK
businesses and the impact of the acquisition of Scottish Widows.
International fees and commissions increased by 5 per cent.
Fees and commissions payable increased by £9 million against the
first half of 1999, largely as a result of higher interchange
fees for card services and increased costs associated with a
number of new products.
Income from long-term assurance business increased by £210
million, as a result of the impact of the acquisition of
Scottish Widows and the one-off benefit arising from changes in
the economic assumptions applied to our long-term assurance
business offset by a reduction caused by short-term fluctuations
in investment returns. General insurance premium income
increased by £10 million, or 5 per cent, against the first half
of 1999.
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Fees and commissions receivable:
UK current account fees 319 338 325
Other UK fees and commissions 565 485 493
Insurance broking 191 150 177
Card services 140 137 142
International fees and commissions 133 127 123
1,348 1,237 1,260
Fees and commissions payable (223) (214) (212)
Dealing profits (before expenses):
Foreign exchange trading income 71 66 67
Securities and other gains 29 41 41
100 107 108
Income from long-term assurance
business
Income before pension provision 371 161 168
Pension provision - - (102)
371 161 66
General insurance premium income 200 190 200
Other operating income 159 114 128
Total other income 1,955 1,595 1,550
Page 27 of 39
LLOYDS TSB GROUP
OPERATING EXPENSES
Operating expenses
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Administrative expenses:
Staff:
Salaries and profit sharing 799 729 771
National insurance 65 63 62
Pensions (51) (56) (52)
Restructuring 13 13 7
Other staff costs 84 85 95
910 834 883
Premises and equipment:
Rent and rates 121 130 120
Hire of equipment 13 16 17
Repairs and maintenance 53 57 50
Other 47 52 48
234 255 235
Other expenses:
Communications and external data
processing 199 210 196
Advertising and promotion 77 57 56
Professional fees 30 46 44
Other 150 159 165
456 472 461
Administrative expenses 1,600 1,561 1,579
Exceptional restructuring costs 74 - -
E-commerce investment costs 42 - -
Total administrative expenses 1,716 1,561 1,579
Depreciation 154 127 138
Amortisation of goodwill 6 6 6
Total operating expenses 1,876 1,694 1,723
Efficiency ratio 44.0% 42.9% 43.3%
Efficiency ratio* 42.9% 43.0% 42.4%
* excluding short-term fluctuations in investment returns,
changes in economic assumptions, exceptional restructuring costs
and pension provision.
Total operating expenses increased by £182 million, or 11 per
cent, compared with the first half of 1999. Exceptional
restructuring costs in the first half of the year totalled £74
million and e-commerce investment costs were £42 million. On a
like-for-like basis, excluding exceptional restructuring costs,
additional e-commerce investment costs and the increased costs
following the acquisition of Scottish Widows, costs increased by
£49 million against the first half of 1999 and increased by £20
million against the second half of 1999. Reduced costs in
many areas were offset by higher staff costs, partly
Page 28 of 39
LLOYDS TSB GROUP
Operating expenses (continued)
reflecting an increased accrual for profit sharing and
millennium weekend overtime costs, increased advertising costs
and a higher depreciation charge.
The exceptional restructuring costs of £74 million comprise
mainly severance, software and consultancy costs and the write-
down of equipment. In 2000 we expect these restructuring costs
to be about £200 million. Overall, the individual programmes
associated with these costs are expected to achieve payback
within three years.
The efficiency ratio was 44.0 per cent compared to 42.9 per cent
a year ago. Excluding short-term fluctuations in investment
returns, changes in the economic assumptions applied to our
long-term assurance business, exceptional restructuring costs
and pension provision, the efficiency ratio improved slightly
to 42.9 per cent, from 43.0 per cent in the first half of 1999.
Number of employees (full-time equivalent)
Staff numbers increased by 2,038 to 78,094 in the first half of
the year. Within UK Retail Banking staff numbers increased by
134 as we continue planned improvements to customer service and
increase our call centre capacity. In Insurance and Investments
numbers of staff increased to reflect the acquisition of
Scottish Widows, in Wholesale Markets staff numbers decreased by
85 and in International Banking there were lower staff numbers
in Brazil and New Zealand. Excluding an increase of 3,061 staff
following the acquisition of Scottish Widows and a reduction of
584 on the disposal of the new business capacity of Abbey Life,
staff numbers decreased by 439.
Since the merger of Lloyds Bank and TSB Group at the end of
1995, there has been an underlying reduction of 17,747 staff of
which 5,407 relate to staff employed in businesses sold and
12,340 to reductions in our ongoing businesses.
30 June 31 December
2000 1999
UK Retail Banking* 45,893 45,759
Mortgages 3,709 3,669
Insurance and Investments 7,558 5,204
Wholesale Markets 6,988 7,073
International Banking 12,816 13,223
Other 1,130 1,128
Total number of employees (full-time
equivalent) 78,094 76,056
*Although the costs of distributing mortgages and insurance
through the Lloyds TSB network are allocated to the mortgage and
insurance businesses, the number of employees involved in these
activities in the network is included under UK Retail Banking.
Page 29 of 39
LLOYDS TSB GROUP
CREDIT QUALITY
Charge for bad and doubtful debts
Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Domestic:
UK Retail Banking 202 206 222
Mortgages (5) 4 (7)
Wholesale Markets 34 50 25
Total domestic 231 260 240
International Banking 16 55 33
Total charge 247 315 273
Specific provisions 246 315 273
General provisions 1 - -
Total charge 247 315 273
Charge as % of average lending % % %
(annualised):
Domestic 0.51 0.61 0.53
International 0.21 0.75 0.44
Total charge 0.46 0.63 0.52
The total charge for bad and doubtful debts decreased to £247
million from £315 million. The domestic charge decreased to
£231 million from £260 million, and provisions overseas
decreased to £16 million from £55 million, mainly as a result of
a reduced provisions charge from the Losango Consumer Finance
business in Brazil and higher Emerging Market Debt provision
releases.
Non-performing loans were £1,143 million compared with
£1,151 million in June 1999 and £1,088 million in December
1999 and represented 1.0 per cent of total lending, compared
with 1.1 per cent in June 1999 and 1.0 per cent in
December 1999.
Page 30 of 39
LLOYDS TSB GROUP
Movements in provisions for bad and doubtful debts
Half-year to Half-year to Half-year to
30 June 2000 30 June 1999 31 December 1999
Specific General Specific General Specific General
£m £m £m £m £m £m
At beginning
of period 1,762 361 1,792 365 1,864 365
Exchange
and other
adjustments 99 - 38 - (42) (4)
Advances
written off (346) - (342) - (402) -
Recoveries of
advances
written off in
previous years 78 - 61 - 69 -
Charge (release)
to profit and
loss account:
New and
additional
provisions 470 8 543 - 544 7
Releases and
recoveries (224) (7) (228) - (271) (7)
246 1 315 - 273 -
At end of
period 1,839 362 1,864 365 1,762 361
2,201 2,229 2,123
Closing
provisions as %
of lending
(excluding
unapplied
interest)
Specific:
Domestic 762 (0.8%) 795 (0.9%) 773 (0.9%)
International 1,077 (6.8%) 1,069 (7.0%) 989 (6.6%)
1,839 (1.7%) 1,864 (1.8%) 1,762 (1.7%)
General 362 (0.3%) 365 (0.4%) 361 (0.3%)
Total 2,201 (2.0%) 2,229 (2.2%) 2,123 (2.0%)
At the end of June 2000 provisions for bad and doubtful debts
totalled £2,201 million. This represented 2.0 per cent of
total lending.
The level of specific provisions decreased to £1,839 million.
Non-performing lending increased to £1,143 million from
£1,088 million in December 1999. At the end of the half-year,
specific provisions represented over 160 per cent of non-
performing loans.
Page 31 of 39
LLOYDS TSB GROUP
CAPITAL RATIOS
Risk asset ratios
30 June 31 December
2000 1999*
£m £m
Capital
Tier 1 (page 38, note 11 8,089 8,348
Tier 2 7,101 6,838
15,190 15,186
Supervisory deductions (6,881) (2,588)
Total capital 8,309 12,598
£bn £bn
Risk-weighted assets
UK Retail Banking 16.7 15.7
Mortgages 25.3 24.0
Insurance and Investments 0.2 0.1
UK Retail Financial Services 42.2 39.8
Wholesale Markets 32.1 31.6
International Banking 11.7 11.6
Central group items 1.0 1.1
Total risk-weighted assets 87.0 84.1
Risk asset ratios
Total capital 9.5% 15.0%
Tier 1 9.3% 9.9%
Half-year Half-year
30 June 31 December
2000 1999
Post-tax return on average
risk-weighted assets 3.50% 2.86%
* restated (page 34, note 1)
At the end of June 2000 the risk asset ratios were 9.5 per cent
for total capital and 9.3 per cent for tier 1 capital. The 9.3
per cent tier 1 capital ratio appears higher than would perhaps
be expected for the Group. This reflects the higher level of
supervisory deductions resulting from Lloyds TSB's significantly
increased investment in life assurance following the acquisition
of Scottish Widows.
In the first half of 2000, following the acquisition of Scottish
Widows, total capital for regulatory purposes fell by £4,289
million to £8,309 million. Tier 1 capital was reduced by £259
million, as retained profits and the raising of the necessary
capital required to complete the purchase of Scottish Widows was
offset by the £1.8 billion goodwill arising on the acquisition
of Scottish Widows. Tier 2 capital increased by £263 million
and supervisory deductions increased by £4,293 million, largely
resulting from the acquisition of the Scottish Widows insurance
business.
Risk-weighted assets increased to £87.0 billion and the post-tax
return on average risk-weighted assets, a key measure of
efficient use of capital, improved to 3.50 per cent, from 3.19
per cent in the first half of 1999 and 2.86 per cent in the
second half of 1999.
Page 32 of 39
LLOYDS TSB GROUP
BALANCE SHEET INFORMATION
Total assets
Total assets increased by £34 billion, or 19 per cent, from the
end of 1999 of which £23 billion represented an increase in long-
term assurance liabilities to policyholders following the
acquisition of Scottish Widows (page 9). Over the last 12
months, loans and advances to customers increased by
£8 billion, or 8 per cent, to £107 billion.
30 June 30 June 31 December
2000 1999 1999
Deposits - customer accounts £m £m £m
Sterling:
Non-interest bearing current
accounts 5,860 6,199 6,012
Interest bearing current
accounts 18,368 16,618 17,461
Savings and investment
accounts 43,376 40,741 41,330
Other customer deposits 15,621 17,080 14,696
Total sterling 83,225 80,638 79,499
Currency 13,776 13,861 13,352
Total deposits - customer
accounts 97,001 94,499 92,851
Loans and advances to customers
Domestic:
Agriculture, forestry and
fishing 2,161 2,101 2,183
Manufacturing 3,395 3,142 3,262
Construction 943 764 754
Transport, distribution and
hotels 3,804 3,422 3,540
Property companies 2,183 2,242 2,303
Financial, business and other
services 7,698 6,361 6,614
Personal : mortgages 50,153 45,755 47,451
: other 10,311 9,763 10,092
Lease financing 8,020 8,136 8,369
Hire purchase 3,535 3,741 3,674
Other 1,803 1,553 1,698
Total domestic 94,006 86,980 89,940
International:
Latin America 2,672 2,850 2,558
New Zealand 7,437 7,921 7,659
Rest of the world 4,995 3,822 4,159
Total international 15,104 14,593 14,376
109,110 101,573 104,316
Provisions for bad and
doubtful debts* (2,142) (2,168) (2,067)
Interest held in suspense* (92) (109) (100)
Total loans and advances to
customers 106,876 99,296 102,149
* Figures exclude provisions and interest held in suspense
relating to loans and advances to banks
Page 33 of 39
LLOYDS TSB GROUP
NOTES
1. Accounting policies and presentation
During the first half of the year, the Group implemented the
requirements of Financial Reporting Standard 15, 'Tangible
Fixed Assets'; this has resulted in two changes. The Group's
freehold and long leasehold premises were previously included
in the balance sheet at the last valuation on the basis of
existing use value. Following the implementation of the new
standard the Group's premises will no longer be revalued, and
a prior year adjustment has been made to restate the carrying
value to historical cost. This has resulted in the carrying
value of tangible fixed assets as at 1 January 1999 being
reduced by £112 million and an equivalent adjustment being
made against reserves. The effect of this change upon the
Group's profit and loss account is not significant.
In addition, the Group has reassessed the useful economic
lives and residual values of its freehold and long leasehold
premises and with effect from 1 January 2000, the cost of
these properties, after deducting the value of land, is being
depreciated over 50 years. Previously it was considered that
the residual values were such that depreciation was not
significant. The effect of this change has been to increase
the depreciation charge in the first half of 2000 by £5
million.
The Group has also changed its presentation of assets held
for leasing to customers under operating lease agreements.
These assets are now included within tangible fixed assets
and depreciation charged over their estimated useful economic
lives. Rental income received from customers is included
within other operating income. Operating lease assets were
previously included within loans and advances and the related
income within net interest income. This change has no effect
on profit before tax. The effect of this change on the
balance sheet has been to increase tangible fixed assets by
£630 million and reduce loans and advances to customers by an
equivalent amount (30 June 1999: £324 million; 31 December
1999: £479 million). Comparative figures have been restated.
2. Economic profit
In pursuit of our aim to maximise shareholder value, we use a
system of value based management as a framework to identify
and measure value in order to help us to make better business
decisions. Accounting profit is of limited use as a measure
of value creation and performance as it ignores the cost of
the equity capital that has to be invested to generate the
profit. We choose economic profit as a measure of
performance because it captures both growth in investment and
return. Economic profit represents the difference between
the earnings on the equity invested in a business and the
cost of the equity. Our calculation of economic profit uses
average equity for the half-year and is based on a cost of
equity of 9 per cent (1999: 9 per cent).
Economic profit instils a rigorous financial discipline in
determining investment decisions throughout the Group. It
enables us to evaluate alternative strategies objectively,
with a clear understanding of the value created by each
strategy, and then to select the strategy which creates the
greatest value.
Page 34 of 39
LLOYDS TSB GROUP
3. Earnings per share Half-year to Half-year to
30 June 31 December
2000 1999 1999
Basic
Profit attributable to
shareholders £1,469m £1,315m £1,199m
Weighted average number of
ordinary shares in issue 5,476m 5,429m 5,460m
Earnings per share 26.8p 24.2p 22.0p
Fully diluted
Profit attributable to
shareholders £1,469m £1,315m £1,199m
Weighted average number of
ordinary shares in issue 5,536m 5,544m 5,549m
Earnings per share 26.5p 23.7p 21.6p
4. Tax
The effective rate of tax was 28 per cent (1999 first half:
29 per cent). The lower effective rate of tax, compared with
the standard tax rate of 30 per cent, is largely due to: tax
relief claimed in respect of the group's vacant property
provisions where previously no relief has been claimed, tax
relief on payments to the QUEST to satisfy Save As You Earn
options, and gains on disposals of investments and properties
sheltered by capital losses.
5. Sale and closure of businesses Half-year to Half-year to
30 June 31 December
2000 1999 1999
£m £m £m
Provision for closure of
Lloyds TSB Securities
Services (tax: nil) - - (28)
Provision for sale of
Abbey Life new business
capability (tax: nil)
(including £80 million in
respect of goodwill
previously written off to
reserves, and other asset
write-offs) - - (98)
- - (126)
6. Scottish Widows
On 3 March 2000, the Group completed the transfer of the
business of Scottish Widows' Fund and Life Assurance Society
to its wholly owned subsidiaries Scottish Widows plc and
Scottish Widows Annuities Limited. The consideration for the
transfer of £5.8 billion will be paid to policyholders in
August. Goodwill of £1.8 billion has been capitalised and
included in the Group's balance sheet. In view of the
strength of the Scottish Widows brand and the position of the
business as one of the leading providers of life, pensions,
unit trust and fund management products, in the opinion of
the directors the useful economic life of the goodwill is
indefinite and, consequently, no amortisation charge has been
included in the Group's results.
Page 35 of 39
LLOYDS TSB GROUP
7. Short-term fluctuations in investment returns
In accordance with generally accepted accounting practice in
the UK, it is the Group's accounting policy to carry the
investments comprising the reserves held by its life
companies at market value. In the past, this has not had a
significant impact upon the Group's results because of the
limited reserves necessary to support the predominantly unit
linked business of Lloyds TSB Life Assurance and Abbey Life.
However, the reserves held to support the with-profits
business of Scottish Widows are substantial and changes in
market values will result in significant volatility in the
Group's embedded value earnings. Consequently, in order to
provide a clearer representation of the underlying
performance, the results of the Life and Pensions business
have been analysed between an operating profit, which
includes investment earnings calculated using longer-term
investment rates of return, and a profit before tax,
separately identifying the short-term fluctuations in
investment returns and other one-off items. This approach is
already established practice amongst listed insurance
companies in the UK.
The longer-term rates of return for the period are consistent
with those used by the Group in the calculation of the
embedded value at the beginning of the period, which were
8.00 per cent for equities and 5.25 per cent for gilts.
These are based upon a long-term view of economic activity
and are therefore not adjusted for market movements which are
considered to be short term. This approach is considered the
most appropriate given the long-term nature of the portfolio
of products and achieves consistency in reporting from one
period to the next.
Lloyds TSB General Insurance also holds investments to
support its underwriting business; these are carried at
market value and gains and losses included within dealing
profits. Consistent with the approach adopted for the Life
and Pensions business, an operating profit for the general
insurance business has been calculated including investment
earnings normalised using the same long-term rates of return.
8. Changes in the economic assumptions applied to our long-term
assurance business
The shareholders' interest in the long-term assurance
business ('embedded value') is calculated on the basis of a
series of economic and actuarial assumptions. Following the
acquisition of the business of Scottish Widows, a detailed
review of the economic assumptions used in the embedded value
calculation has been carried out, to ensure that these
assumptions remain appropriate for the enlarged Life and
Pensions business in the context of forecast long-term
economic trends. As a result of this review certain
assumptions have been amended, including the risk-adjusted
discount rate which has been reduced from 10 per cent to 8.5
per cent. The revised assumptions, which have been used with
effect from 1 January 2000 for Abbey Life and the
bancassurance operation of Lloyds TSB Life, have resulted in
a one-off credit to the profit and loss account of
£127 million. The same assumptions have been used for the
Scottish Widows business from the date of acquisition.
Page 36 of 39
LLOYDS TSB GROUP
9. Efficiency programme
In February 2000 the Group announced that additional
opportunities have been identified that will enable the Group
to reduce its overall cost base. The cost reductions,
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 about £200 million in 2000.
Overall, the individual programmes associated with these
costs are expected to achieve payback within three years.
The extensive programme will result in lower overall staffing
levels, but the impact of this will be mitigated by our
natural staff turnover.
The main features of the efficiency programme, which is
primarily focused on non-customer facing activities, will be:
- the centralisation of computer operations
- the further consolidation of all our large scale processing
operations and support functions including the complete
removal of all back office processing from branches
- the introduction of internet and intranet technology to
further automate processing activities
- the further streamlining of the branch network, combined
with the expansion of lower cost delivery channels such
as telephone banking and internet operations
- the further reduction of our purchasing costs
- the rationalisation of non-personal banking activities,
through the progressive sharing and consolidation of
operational functions.
10.Dividend
The interim dividend for 2000 will be 9.3p per share (1999:
8.1p), an increase of 15 per cent.
Shareholders who have already joined the dividend
reinvestment plan will automatically receive shares instead
of the cash dividend. Shareholders who have not joined the
plan and wish to do so may obtain an application form from
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex,
BN99 6DA (telephone 0870 6003990). Key dates for the payment
of the interim dividend are:
Shares quoted ex-dividend. Shares purchased
before this date qualify for the dividend 7 August
Record date. Shareholders on the register
on this date are entitled to the dividend 11 August
Final date for joining or leaving the
dividend reinvestment plan 13 September
Interim dividend paid 11 October
Page 37 of 39
LLOYDS TSB GROUP
11.Review of interim profits
The interim profits in 2000 were reviewed and reported upon,
without qualification, by the Company's auditors
PricewaterhouseCoopers, in accordance with the conditions set
out in the Financial Services Authority's Guide to Banking
Supervisory Policy (chapter CA Definition of Capital, section
5) thereby enabling the retained profit to be included in
tier 1 capital shown on page 32.
12.Other information
The results for the half-year ended 30 June 2000 were
approved by the directors on 27 July 2000.
Statutory accounts for the year ended 31 December 1999 were
delivered to the registrar of companies. The auditors'
report on these accounts was unqualified and did not include
a statement under sections 237(2) (accounting records or
returns inadequate or accounts not agreeing with records and
returns) or 237(3) (failure to obtain necessary information
and explanations) of the Companies Act 1985.
Results for the year ending 31 December 2000 will be
announced on 16 February 2001.
Page 38 of 39
LLOYDS TSB GROUP
CONTACTS
For further information please contact:-
Kent Atkinson
Group Finance Director
Lloyds TSB Group plc
020 7356 1436
E-mail: kent.atkinson@ltsb-finance.co.uk
Michael Oliver
Director of Investor Relations
Lloyds TSB Group plc
020 7356 2167
E-mail: michael.oliver@ltsb-finance.co.uk
Geraldine Davies
Director of Corporate Communications
Lloyds TSB Group plc
020 7356 2078
E-mail: daviesg1@lloydstsb.co.uk
Copies of this news release may be obtained from Investor
Relations, Lloyds TSB Group plc, 71 Lombard Street, London EC3P
3BS (telephone 020 7356 1273). A summary will appear as an
advertisement in The Times and The Scotsman on 29 July 2000.
Information about the Group's role in the community and copies
of the Group's code of business conduct and its environmental
report may be obtained by writing to Public Affairs, Lloyds TSB
Group plc, 71 Lombard Street, London EC3P 3BS.
The full news release can also be found on the Internet at
http://www.lloydstsb.com.
Page 39 of 39
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