Lloyds TSB shuns riskier loans

LLOYDS TSB is sacrificing mortgage-market share rather than take on too many higher-risk customers.

The bank said today that it had lost market share in the third quarter as a result of its policy of avoiding significant exposure to buy-to-let borrowers and other loan applicants unable to secure home loans on normal terms.

Those included sub-prime borrowers - often people who have defaulted on loans in the past - and self-certified borrowers, who do not have to give proof of earnings to secure loans.

The bank, which owns the Cheltenham & Gloucester home loans business, said it would deliver a 'satisfactory trading performance' for 2003 in line with expectations.

But to the frustration of some shareholders, Lloyds remained silent on the the future of the dividend and the possibility of a share buyback. It said it made a £900m profit on the disposals of its New Zealand and Brazilian operations but gave no fresh clues as to how the proceeds would be used.

Asset quality remained good, it said, with no material increase in the level of arrears or defaults. The third-quarter bad-debt charge would be similar to last year as a proportion of the total loan book.

Chief executive Eric Daniels said: 'I have an increasing sense of confidence that we are now building on the foundations that have been put in place for the group to deliver improved performance in 2004 and beyond.'