Lloyds hit by bad debt

February 15, 2002 Posted: 1110 GMT

LONDON (CNN) -- Lloyds TSB, Britain's third largest bank, on Friday said pretax profit fell last year as the cost of bad loans mounted.

The London-based bank said pretax profit fell 8 percent to £3.55 billion ($508 billion) in 2001, while underlying operating profit rose 6 percent to £4.462 billion. Total income increased 3.5 percent last year to £8.83 billion from £8.52 billion in 2000. 

Earnings per share came in at 45.2 pence, compared with 49.3p a year earlier.

Lloyds also said on Friday it would eliminate 3,000 of its 80,000 staff this year as it steps up cost-cutting efforts that it began in 2000, Reuters said.

About 5,000 jobs would go in total, but the bank said it would also create 2,000 new positions, Reuters said. The jobs cuts would not be in Lloyds' branches, but in areas where the bank has restructured and introduced new technology.

Lloyds shares fell 2.3 percent to 756.6 pence in midday trading on Friday in London.

Its results come one day after three of Europe's biggest banks reported their results, which included hefty provisions for bad debt.

The bank said it set aside £100 million to cover bad debt related to Argentina, which is currently in the midst of a financial crisis. Bad debt provisions, excluding Argentina, rose 28 percent to £692 million last year from £541 million the previous year.

On Thursday, Britain's Barclays, the UK's fourth-largest bank, said pretax profit for 2001 rose 9 percent to £3.608 billion. It increased its bad debt provisions by 35 percent to £1.149 billion.

ABN AMRO, the biggest Dutch bank, reported 2001 net operational profit of 2.36 billion, down from 3.097 billion the year before. The bank said its provision for possible bad debts had doubled last year to 1.43 billion.

Switzerland's UBS, Europe's biggest bank, said net income fell 24 percent to 1.106 billion Swiss francs ($652.1 million) in the last three months of 2001. But the world's ninth-largest bank by market value said it had "no material, unhedged exposure to any of the widely publicised international corporate default cases of the last few months."