SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
11th December, 2006
LLOYDS TSB GROUP plc
(Translation of registrant's name into English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F..X..Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes .....No ..X..
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule
12g3-2(b): 82- ________
Index to Exhibits
Item
No. 1 Regulatory News Service Announcement, dated 11th December, 2006
re: Trading Statement
149/06
11 December 2006
LLOYDS TSB - TRADING UPDATE
Lloyds TSB Group plc will be holding discussions with analysts and investors
ahead of its close period for the year ending 31 December 2006. This statement
sets out the information that will be provided at those discussions.
Lloyds TSB expects to deliver a strong trading performance for 2006 and to
continue to achieve satisfactory profit growth. Results are expected to be in
line with market expectations*. The Group is making considerable progress in
the delivery of its organic growth strategy and in the development of its
customer franchises. This has resulted in good sales growth throughout the
organisation, positioning the Group to deliver stronger revenue growth over the
next few years. The Group's focus on improving productivity and efficiency,
whilst continuing to invest in future business growth, has been maintained. As
a result, revenue growth remains well ahead of cost growth. Overall credit
quality remains satisfactory. The Group has also continued to improve its
capital management disciplines.
Continued progress in UK Retail Banking
The Retail Bank continues to make good progress, with strong product sales
growth now beginning to drive higher revenue growth. We continue to improve the
recruitment of target current account customers. Good growth in savings and
investment products, especially in bancassurance, has helped offset the expected
lower growth in unsecured consumer lending products, in part as a result of
tightened credit criteria. We have continued to invest in improving customer
service whilst maintaining strong cost control, and expect full year costs in
the retail bank to be lower than in 2005. This will lead to a substantial
improvement in the division's cost:income ratio.
Strong sales in Insurance & Investments
In Insurance & Investments, sales of life, pensions and long-term savings
products through both the bancassurance and Independent Financial Adviser
channels have continued to be strong. The rate of sales growth in the second
half of the year is however expected to be lower than in the first half, which
benefited from the impact of 'A' day. New business margins are expected to be
stable year-on-year. In General Insurance, sales of home insurance products
through the branch network have been strong, and the claims ratio continues to
improve.
Good trading momentum in Wholesale & International Banking
In Wholesale & International Banking, good trading momentum has been maintained
as the division's strategy to leverage the Group's corporate and small business
customer relationships continues to generate good levels of income growth. In
addition, we are continuing to grow our corporate and small business customer
base. In Corporate Markets we have continued to develop new revenue streams and
increase cross-selling revenues and we have maintained our market leading share
of new business start-ups in Business Banking. Revenue growth will exceed cost
growth despite further targeted investment being made in the enhancement of our
product and distribution capabilities.
Strong Group cost performance
The Group's strong cost performance has continued. Substantial efficiency
improvements have resulted in further progress in reducing unit processing
costs, at a time when the Group has maintained significant investment in
building the business. Revenue growth will exceed cost growth in each division
and at Group level, resulting in a further improvement in the Group's cost:
income ratio. The Group's programme of efficiency improvements is progressing
ahead of plan and is now expected to deliver increased net benefits in 2006 of
over GBP40 million, and GBP100-150 million in 2007.
Overall credit quality remains satisfactory
Overall, Group asset quality remains satisfactory and we expect the Group's
impairment charge as a percentage of average lending for the full year to be
lower than in the first half of the year.
We continue to expect the retail impairment charge in the second half of the
year to be no higher than in the first half, notwithstanding higher levels of
bankruptcies and Individual Voluntary Arrangements (IVAs). The rate of growth
in bankruptcies has shown some early signs of moderating, however IVAs continue
to increase. The quality of new unsecured consumer lending has continued to
improve and the Group has also made further improvements in collection
procedures.
In Wholesale, corporate and small business asset quality has remained strong
with no signs of deterioration in the overall quality of our lending. The
quality of new business remains good. Lower levels of corporate recoveries than
in 2005 and a higher level of retail lending impairment in our Asset Finance
business mean that the full year increase in the impairment charge in Wholesale
& International Banking will be similar to the rate of growth in the first half
of the year.
Robust capital position
The Group's capital ratios remain robust and, as anticipated, the rate of
risk-weighted asset growth in the second half of 2006 is expected to be slower
than in the first half. This has been supported by the Group's move towards an
'origination and distribution' model of balance sheet management. Later this
month the Group expects to complete a second residential mortgage-backed
securitisation (RMBS) programme, bringing the total RMBS securitisations for the
second half of 2006 to approximately GBP10 billion. The capital position of
Scottish Widows remains strong and we expect to repatriate at least GBP400
million of surplus capital to the Group before the end of 2006.
Volatility
In the first 10 months of 2006, the total positive volatility relating to the
Group's insurance and banking businesses was GBP176 million, largely reflecting
the strong performance of equity markets during the period.
Group pension scheme
Following recent changes in age discrimination legislation, the Group has ceased
to augment the pension entitlement of employees taking early retirement. This
change has reduced the Group's pension liabilities by approximately GBP125
million resulting in a similar one-off credit to the 2006 income statement.
Ongoing contributions by the Group, including additional voluntary
contributions, are expected to eliminate the actuarial funding deficit over
approximately six years.
Continuing to build our strong customer franchises and delivering on our
financial goals
Eric Daniels, Group Chief Executive, said "We are delivering against our
financial goals whilst investing in longer-term growth. Across the Group we are
continuing to build our customer franchises and expect this to generate higher
revenue growth in future years. We believe this, combined with substantial
efficiency and service improvements, will ensure sustainable double-digit
economic profit growth over time. The Group remains on track to deliver a very
satisfactory performance for 2006, and continues to invest to generate improved
long-term earnings growth."
*On 8 December 2006, the consensus of analysts' forecasts for profit before tax,
excluding volatility, for the year ending 31 December 2006 was GBP3,690 million.
This consensus, and the reference to the Group's performance, excludes the
expected pension scheme related credit of approximately GBP125 million.
Trading update webcast details
The Group Finance Director's briefing will be available as a live audio webcast
on the Investor Relations website at www.investorrelations.lloydstsb.com and a
recording will be posted on the website shortly after the briefing.
Timetable
2006 results announcement 23 February 2007
Ex dividend date 7 March 2007
Dividend record date 9 March 2007
Dividend payment date 2 May 2007
All dates are provisional and subject to change.
For further information:-
Investor Relations
Michael Oliver +44 (0) 20 7356 2167
Director of Investor Relations
E-mail: michael.oliver@ltsb-finance.co.uk
Sarah Pollard
Senior Manager, Investor Relations
E-mail: sarah.pollard@ltsb-finance.co.uk +44 (0) 20 7356 1571
Media
Mary Walsh +44 (0) 20 7356 2121
Director of Corporate Relations
E-mail: mary.walsh@lloydstsb.co.uk
FORWARD LOOKING STATEMENTS
This announcement contains forward looking statements with respect to the
business, strategy and plans of the Lloyds TSB Group and its current goals and
expectations relating to its future financial condition and performance.
Statements that are not historical facts, including statements about Lloyds TSB
Group's or management's beliefs and expectations, are forward looking
statements. By their nature, forward looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future. Lloyds TSB Group's actual future results may differ
materially from the results expressed or implied in these forward looking
statements as a result of a variety of factors, including UK domestic and global
economic and business conditions, risks concerning borrower credit quality,
market related risks such as interest rate risk and exchange rate risk in its
banking businesses and equity risk in its insurance businesses, inherent risks
regarding changing demographic developments, catastrophic weather and similar
contingencies outside Lloyds TSB Group's control, any adverse experience in
inherent operational risks, any unexpected developments in regulation or
regulatory actions, changes in customer preferences, competition, industry
consolidation, acquisitions and other factors. For more information on these
and other factors, please refer to Lloyds TSB Group's Annual Report on Form 20-F
filed with the US Securities and Exchange Commission and to any subsequent
reports furnished by Lloyds TSB Group to the US Securities and Exchange
Commission or to the London Stock Exchange. The forward looking statements
contained in this announcement are made as of the date hereof, and Lloyds TSB
Group undertakes no obligation to update any of its forward looking statements.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LLOYDS TSB GROUP plc
(Registrant)
By: M D Oliver
Name: M D Oliver
Title: Director of Investor Relations
Date: 11th December, 2006