LLOYDS TSB Scotland, a subsidiary of Lloyds Banking Group, has revealed that profits were down last year – but, unlike some of its peers, the bank was still in the black.
Annual accounts for 2008, filed to Companies House yesterday, reveal that income during the year grew to £287.9 million, from £280.9m in 2007. However, pre-tax profits slumped 23 per cent to £89.8m from £116.8m in 2007.
According to the repor
t, Susan Rice, Lloyds TSB Scotland's chief executive and chairman, took a small decrease in pay. The report says the "highest paid director", assumed to be Rice, made £366,373 in 2008 down from £379,369 in 2007. She also received a slightly larger pension payment of £32,548, up from £27,817.
Rice, who is now managing director of Scottish operations following Lloyds takeover of HBOS, also received 20,185 in shares – currently worth £147,640. She has options on a further 357,111 shares, which will vest sometime before 2015.
Losses at the Scottish bank also included impairment provisions of £63.6m, up 71 per cent on the year before. This included £40.4m of actual losses – mainly from its corporate lending division – and the impact of lower house prices, which bit into the value of loans held over mortgages.
The report said lending was up in 2008. Overall, the bank increased lending by 12.5 per cent. Mortgage balances were up 11.8 per cent, while lending to businesses grew 7.9 per cent. Lloyds increased the number of customers by 5.5 per cent.
In commercial banking, which focuses on small and medium-sized enterprises, deposits grew by 17.7 per cent and lending increased 41.5 per cent. New SME accounts were up 42 per cent.
Although amounts held in interest bearing current accounts fell £100,000 from £1.6 billion in 2007 to £1.5bn, savings and other accounts rose. Savings balances grew by £547m to £2.7bn, although "other customer deposits" fell by a similar amount.
Overall in 2008, the bank lent £10.5bn to customers, up from £9.5bn. Most of this lending was mortgages – up to £6.3bn from £5.6bn in 2007. In 2008, lending to the troubled property sector rose to £1.2bn from £949m the year previous.
Although lending grew, the bank tightened lending criteria to riskier ventures. In 2008, the bank cut the number of troubled loans it dealt with by more than half. While a year earlier the bank renegotiated £14.2m worth of "impaired" or past-due loans, in its latest figures this was cut to £6.3m.
In its report statement, the board of Lloyds in Scotland warned that there would be further write-downs this year.
The statement said: "The group's prospects are linked closely to the performance of the Scottish economy and the economic conditions are likely to remain challenging for most of 2009. This is likely to result in a lower level of income growth and above-trend impairment."
Lloyds TSB Scotland operates 185 branches and 285 automated tellers. At the end of 2008, it employed 2,100 staff, down from 2,119 a year earlier.
Charitable beneficiaries felt the pinch last year. The Lloyds TSB Foundation for Scotland, which distributes a proportion of the larger banking group's profits, paid out £7.5m to charity down from £8.2m in 2007.
