UK banking group Lloyds TSB has forecast a 6.3% increase in pretax profits for 2006 following the implementation of capped bad loans and cutting 3,000 jobs earlier in the year.
According to a statement by Lloyds TSB, earnings are expected to meet the analysts’ estimations of GBP3.69 billion, compared to GBP3.47 the previous year.
The profit rise has been boosted by ongoing cost cutting measures, which, according to Helen Weir, Lloyds TSB finance director, will involve around 3,000 UK positions going in 2006, which is around the same number cut in 2005.
In addition, she also stated: We have facilities in India, primarily back office roles. We have a program that we are continuing. I couldn’t tell you how many more jobs we have in India than a year ago but it’s just part of our overall business model. This is not a program about head count reduction. What we are aiming at is being more efficient and more productive.
The bank has also implemented a robust defense against bad debt loses. In the first six months of this fiscal year, the Lloyds TSB’s retail division suffered a 16% rise in bad debt charges but it expects the following six months to be no higher, despite continued growth in higher levels of bankruptcies and individual voluntary arrangements (IVAs) in the UK in general.
Meanwhile, the bank’s cost savings are ahead of schedule and are expected to bring in a profit amounting to GBP40 million this year and up to GBP150 million next year.