Lloyds stays silent on windfall

Lloyds TSB told the City yesterday that it had shunned the risky buy-to-let mortgage market but left investors guessing about any plans to return cash through a share buy-back.

The bank's shares jumped 11.5p to 416p on relief that its trading statement before its full-year results due in March did not contain any nasty surprises.

Lloyds TSB also failed to give any information about its dividend, which some investors believe could be cut be cause of pressure on its capital position.

After selling off non-core businesses in Brazil and New Zealand, new chief executive Eric Daniels has raised the possibility of a share buy-back with the proceeds. The bank is not now expected to give any further information on any such windfall for investors until March, when it publishes its full-year profits for 2003.

This left analysts and investors to focus on details of current trading. The bank said it had foregone share in the mortgage market through its Cheltenham & Gloucester arm by avoiding "significant exposure" to the buy-to-let market.

The bank said it kept away from other riskier mortgage businesses by not exceeding a 95% loan-to-value ratio on its home deals.

Analysts are concerned that Lloyds is having greater difficulty than its rivals in finding ways of expanding its business, which has traditionally expanded through acquisitions such as C&G and Scottish Widows.

Mr Daniels, who took over six months ago, said that un derlying performance for the group had improved. "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."

The City has questioned the bank's commitment to its Scottish Widows insurance arm, but yesterday Lloyds said levels of new business income were "slightly higher" than in the same period last year. It also said that Scottish Widows' capital strength was among the highest in the industry.