The first half of 2008 has seen Lloyds TSB profits fall 70 percent compared with the same period last year, at GBP599 million.
The biggest cause of the reduced profit figures was a devaluation of the banks assets thanks to the global economic downturn. Taking this factor out of the equation Lloyds TSB has actually performed very well, especially in the retail banking sector. On this basis they actually increased their shareholder dividend, putting it up by 2 percent to 11.4 pence per share.
A Lloyds TSB spokesman, discussing the results, said that the bank was not directly associated with the American sub-prime market that collapsed so spectacularly and so has been quite well sheltered. The actual performance of the bank when their asset devaluations are removed has been an increase in pre tax profit of 11 percent, something that bodes very well for the future.
In 2007 approximately 18,000 unsecured personal loans were taken out to pay for school fees, with a total value of around GBP165 million according to Sainsburys Bank.
Looking at the historical data Sainsburys Bank also found that over GBP2 billion extra was spent on school fees in 2006 compared with just 2 years previously. This is a massive additional amount to cover and explains the increasing use of unsecured personal loans and other forms of borrowing to fund childrens educations.
Looking ahead Sainsburys Bank also expect the trend to continue. With a rising cost of living, more children enjoying private education and also the fact that school fees themselves rise at levels well above the rate of inflation they are predicting more borrowing.
Lloyds TSB has this week increased the rates of interest offered on its Plus current account to 6 percent, an enormous 2 percent more than it was previously.
The new higher interest rate is being offered on this particular Lloyds TSB current account for new customers opening their account before July 13. The only proviso is that at least GBP1,000 per month must be paid into the account, something that is quite common anyway.
Increasing their interest rate is quite a move for Lloyds TSB, though they appreciate that customers in the UK tend to be quite fixed when it comes to their current accounts, tending to stay with the same bank for many years. Lloyds therefore feel they have to really make an impact with their message in order to get people to consider moving and an impact it certainly is.
