Dealing Profits At Lloyds Tsb Fall 45 Per Cent
Dealing profits at Lloyds TSB Group Plc fell in 1996 by 45 per cent to 96 million before expenses from 175 million in 1995.
Lloyds said its foreign exchange trading income, down at 113 million from 122 million in 1995, held up well despite less favourable trading conditions.
Income from securities and other trading, however, dropped sharply by 70 million in 1996 to post a loss of 17 million from 53 million profit in 1995. Lloyds said this included investment gains on marking-to-market the general insurance portfolio, which were 21 million lower than in 1995 as the equity and gilt markets strengthened less than the previous year. Lloyds TSB reported a 52 per cent jump in 1996 pre-tax profits to 2.505 billion ($4.09 billion).
Meanwhile, banking analysts said on Friday that Lloyds TSB Group Plcs 52 per cent headline rise in 1996 pre-tax profits was rather flattering and expressed some concern for future income growth. The pre-tax profit figure of 2.505 billion was just above top expectations although these had been expected to be bettered after some components of the groupLloyds Abbey Life and Cheltenham & Gloucesterrecently reported higher than expected gains.Theres nothing really wrong with the results, said John Leonard, banking analyst at Salomon Brothers. But they are not as glorious as they look on the surface.
Analysts pointed out that the large drop in bad debt provisions44 per cent down to 327 millionwas a surprise, even though improvement was expected given the fact that the bank has increased higher quality assets such as mortgages. Leonard and Panmure Gordon analyst David Poutney said they would likely not be increasing their profit forcasts for 1997 which stand at 2.825 billion and 2.940 billion respectively.
But Poutney, who has been advising clients to hold the shares but take profits, said he was now a seller. Overall, they are good figures but then it comes down to the valuation of the shares, Poutney said, and they are looking a bit expensive. I cant see them making much headway from here. Lloyds TSB shares stood 5-1/2p lower at 496-1/2p at 0900 GMT. Poutney expressed concern that costs, which were down in the first half, had ended the year flat and also noted that income growth had slowed in the second six months.