By Anastasia Tomazhenkova: Lloyds TSB Group Plc, the biggest U.K. provider of personal loans, posted its second-half profit rose 9%, helped by mortgage lending, asset sales and cost controls.
The bank gained as much as 6.5% in London trading after saying net profit in the six months ended December 31 increased to 1.75 billion pounds (3.44 billion dollars), or 30.8 pence per share, from 1.59 billion pounds, or 28 pence. It also increased the dividend by 5%.
The head of U.K. equities at Hargreaves Lansdown Stockbrokers, Richard Hunter said "Lloyds TSB has proved to be something of a safe harbor amid the global storm''. He added "These numbers have not disappointed.''
Lloyds TSB managed to grow pretax income in its U.K. consumer bank by 20% even as the economy weakened. The bank increased mortgage lending and attracted more deposits, helping to control costs and offset the U.K.'s slowdown as consumers try to reduce a record 1.4 trillion pounds of debt. Chief Executive Officer Eric Daniels said Lloyds TSB won't have a "significant'' increase in bad debts in this year's first half.
The bank gained as much 28.25 pence and traded up 5.4% to 460.5 pence at 1:43 p.m., valuing Lloyds TSB at 26.3 billion pounds. The shares are down 2.4% this year, outperforming the nine-member FTSE All-Share Banks Index, down 11%.
Lloyds TSB took a second-half writedown of 280 million pounds on credit-related assets. That's a fraction of the charges at larger British banks such as Barclays Plc, which wrote down 1.64 billion pounds at its securities unit last year, and Royal Bank of Scotland Group Plc, which said in December it will record 1.25 billion pounds in net writedowns.
"Our higher-quality, lower-risk business model has been clearly demonstrated in the resilience of our earnings stream," the bank said in a statement.
Banks globally have written off more than 150 billion dollars in the past half-year, including large fourth-quarter writeoffs by European competitors such as UBS AG and Credit Suisse.