Tuesday May 6, 01:07 PM
Update: Writedown hits profits at Lloyds TSB
LONDON (ShareCast) - Lloyds TSB wrote down £387m during the first quarter and experienced weaker growth in insurance, although the high street bank says it is on course for a "good" first half. Profit before tax at Wholesale and International
Banking has been cut by £387m in the first quarter of 2008 due to the credit crisis, Britain's fifth largest bank admitted. Most of the loss was put down to a £278m drop in the value of the firm's trading portfolio, which contained £200m of indirect exposure to US sub-prime mortgages and asset-backed securities (ABS) and collateralised debt obligations (CDOs) at the end of March. But Lloyds also announced a £740m adjustment to its reserves to reflect a reduction in the market value of assets intended to be held to maturity. The company, which also wrote down £280m last year, said the level of growth of insurance products has slowed due to a switch away from equity based to cash based products. Nevertheless, the group said its lower risk strategy has kept write downs far below many of its competitors and, excluding the impact of market turbulence, it posted double-digit profit before tax growth in the period. The group added that it has maintained its strong liquidity and funding position. "Despite the more challenging market conditions, the group remains firmly on track to deliver a good performance for the first half of 2008, excluding the impact of market dislocation and insurance related volatility," said chief executive Eric Daniels. Interim results are due on 30 July.
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