High Street bank Lloyds TSB has unveiled lower profits, and announced plans to axe 3,000 jobs this year in an attempt to cut costs.

The bank said it planned to cut a total of 5,000 jobs this year, but would create 2,000 in other areas, resulting in a net loss of 3,000 positions.

The cuts will be targeted at the bank's administrative support functions, while the new jobs will mostly be in customer service, a spokeswoman said.

She added that the bank aimed to achieve the job cuts through voluntary redundancies and natural wastage.

News of the job losses came as Lloyds announced a dip in profits last year, and pledged to keep costs under tight control in 2002.

Profits dip

The bank said that pre-tax profits for 2001 fell by 8% on the year to �3.5bn ($4.9bn), citing an "overall fall in stock market values".

Profits came in below analysts expectations', which had ranged from �3.7bn to �4bn.

Lloyds TSB chief executive Peter Ellwood said the company had performed well, "against a background of significant turbulence and uncertainty in global economies and stock markets".

City investors were unconvinced, marking Lloyds shares 40.5p lower to close at 734.5p.

Argentina fallout

The bank added that it had set aside �750m to cover bad debts, 27% more than the year before.

The increase in bad debt provisions included a �100m allocation to cover the bank's exposure to Argentina's economic crisis.

Profits at the company's UK retail banking business fell steeply, dropping 18% on the year to �633m due to increased investment in customer services.

But total revenues edged slightly higher, climbing to �9.5bn from �8.6bn the year before.

Merger opportunities sought

Lloyds said it aims to limit growth in costs to no more than the annual rate of inflation in 2002 as part of an effort to increase efficiency.

The bank added that it is still on the lookout for potential mergers and acquisitions, although it stressed that all such operations "will have to add value for our shareholders."

Last year, Lloyds' high-profile bid to buy out Abbey National was blocked by competition watchdogs.

That failed acquisition attempt cost �16m, Lloyds said on Thursday.