Overseas sales ate into Lloyds TSB's profits

The UK's fifth biggest bank said pre-tax profits for the six months to the end of June fell to �1.56bn ($2.8bn).

Analysts had expected the slide after the company sold overseas businesses last year to focus on the UK.

Among the business disposed of were its New Zealand operations, sold for �2.25bn and its Brazilian operations, which went for �81m.

"Despite the increasingly challenging external environment, we are establishing a track record of earnings growth and remain well positioned to deliver an improved trading performance in the second half of 2004 and beyond," said chief executive Eric Daniels.

Improving trend

The move was part of the bank's strategy to revive its core UK business after years of static earnings.

Lloyds said it had continued to improve its market share in key product areas with customer lending up 8% to �142bn, while customer deposits have risen 4% to �118bn.

In its mortgage business, balances increased 13% to �76.3bn as the UK housing market remained strong, while credit card balances increased by 31% to �7.2bn.

And pre-tax profit from continuing operations was up 12% to �1.65bn as the bank boosted its share credit cards and mortgages, Lloyds TSB said.