Lloyds rules out Abbey bid

LLOYDS TSB distanced itself today from speculation that it might make another bid for rival Abbey National.

Speaking after unveiling half-year results, chief executive Eric Daniels made it clear he did not believe Lloyds TSB could win approval from the competition authorities.

Abbey, the subject of an £8.5bn agreed takeover from Banco Santander Central Hispano, was last the subject of a Lloyds TSB bid in 2001 when it offered some £18bn but that offer was blocked on competition grounds.

Daniels said today that nothing had changed since then to make him believe a bid would now be approved. He added: 'It seems pretty clear that local banks are precluded by the Competition Commission. I don't believe any of the large local institutions would have any chance of clearing the Competition Commission.'

As it was, the half-year results announcement was full of details of the bank's organic growth plans, accentuating Lloyds TSB's move away from acquisitions and the focus on developing the core banking business.

The bank revealed a 7% dip in half-time profits, a drop that reflected the cost of disposing of overseas business interests. The pre-tax profit of £1.56bn was in line with analysts' forecasts which ranged between £1.48bn-£1.69bn.

The bank scotched worries about the prospects of more base rate rises by the Bank of England, insisting that borrowers had not over-stretched themselves. A spokesman told This Is Money that Lloyds was 'comfortable' with the current market position.

'Our principal lending business, Cheltenham & Gloucester, has always been a prudent and responsible lender. Overall, our average debt-to-value ratio is below 65%. We have a very limited number of mortgages above 80% so we're not worried about this. We haven‘t over-lent and even if one believed that things were to get worse, and we don't, we're comfortable with the current situation.'

Lloyds TSB said it continues to improve its market share in key product areas with customer lending up by 9% to £142bn and customer deposits up by 4% to £118bn.

Mortgage balances increased by 13% to £76.3bn and credit card balances increased by 31% to £7.2bn, or by 14% excluding the acquisition of Goldfish.

New business contribution in Scottish Widows was up by 7% and life and pensions new business margin increased to 24.3%, up from 23.4% in the first half of 2003.

LLoyds also said Scottish Widows remains on track to pay a 2004 dividend to Lloyds TSB Group.

There was more good news for investors as Lloyds confirmed that it is keeping the half-time payout at the high level 10.7p per share.