Trading Statement

Lloyds TSB Group PLC
04 December 2002


157/02                             AVS No:                       4 December 2002


LLOYDS TSB - TRADING UPDATE


Lloyds TSB Group plc will shortly be meeting analysts ahead of its close period
for the year ending 31 December 2002. This announcement details the information
that will be provided at those meetings.


Notwithstanding the slowdown in the UK and all major global economies, Lloyds
TSB continues to trade satisfactorily. As at 30 September 2002 total Group loans
and advances to customers were £132.6 billion, an annualised increase of 9 per
cent, reflecting growth in mortgages, retail lending, and corporate and
commercial lending. Total Group risk weighted assets at 30 September 2002 were
£119.0 billion. Customer deposits totalled £114.2 billion, an annualised
increase of 5 per cent. The Group net interest margin for the nine months to 30
September 2002 was 3.21 per cent, compared with 3.27 per cent in the first half
of the year.


The Group continues to see good market share performances in many of its key
product areas. In the mortgage market, estimated market share has increased
slightly from the first half of the year. Net new lending in the third quarter
of 2002 totalled £1.7 billion, compared with £2.0 billion for the six months to
30 June 2002. This represents an estimated market share of net new lending of
7.4 per cent. Consumer confidence remains robust and this has resulted in
annualised growth of 20 per cent in personal loan and credit card lending.
Within Retail Banking, balances on current accounts and savings and investment
accounts have grown by an annualised 8 per cent.


In the life and pensions market, many of the trends experienced in the first
half of the year have largely been continued. Overall weighted sales from the
Group's life, pensions and unit trust businesses in the nine months to 30
September 2002 were £572.3 million compared to £559.7 million in the first nine
months of last year, an increase of 2 per cent. The modest increase in weighted
sales, compared with the first nine months of 2001, reflected a 14 per cent
increase from life and pensions, largely offset by a 24 per cent reduction from
unit trusts and equity-based ISAs, as many customers have maintained their
investments in cash savings products as a result of the continuing volatility in
global stockmarkets. By distribution channel, weighted sales from independent
financial advisers rose by 16 per cent as a result of strong life and pension
sales. In the branch network, weighted sales were 6 per cent lower as a result
of the substantial reduction in sales of unit trusts and equity based ISA's.
General Insurance product sales, particularly household and creditor insurance,
continue to be strong.

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LLOYDS TSB - TRADING UPDATE/....2

A strong focus continues on managing the Group's day-to-day operating costs and
cost growth for the full year is expected to be lower than the rate of
inflation. Overall Group staff numbers decreased by 1,821 to 79,579 during the
first nine months of 2002, despite an increase of 425 from the acquisition of
First National Vehicle Holdings and Abbey National Vehicle Finance.


Group asset quality remains broadly satisfactory, particularly in the retail
sector. In the corporate sector, whilst overall credit quality continues to be
robust, the Group does have a cautious outlook on a number of corporate sectors
and exposures which are likely to lead to higher levels of corporate
provisioning.


The economic situation in Argentina continues to be difficult and the outlook is
likely to remain uncertain at least until after the new Argentine government
takes office during 2003. On 30 September 2002 the Group's total exposure to
Argentina was some £250 million, net of provisions and charges. The Group
continues to monitor the situation very carefully but, at this stage, it remains
too early to be able to determine the adequacy of the Group's existing level of
provisions for Argentina.


Since the October Presidential election in Brazil, the economic situation has
stabilised and there has been some strengthening of the local currency together
with evidence of more stable bond prices. On 30 September 2002, the Group's
total exposure to Brazil, net of provisions, was £2.4 billion, compared with
£2.8 billion at the end of June 2002. This reduction reflects the
non-replacement of maturing government bonds and a lower sterling translation of
the local balance sheet as a result of the weaker Real, compared to 30 June
2002. Economic activity in Brazil has remained reasonably robust and we believe
this, in conjunction with the significant International Monetary Fund support
package which the newly elected President and incoming Government have indicated
they will support, should alleviate current concerns about the Brazilian
economy.


The Group's capital ratios remain strong and, during the last few weeks, have
been further strengthened by the raising of US$1 billion and €500 million
non-equity tier 1 perpetual capital securities. The Group remains adequately
capitalised to support the possibility of further significant falls in global
stockmarkets.


The Group's Abbey Life subsidiary, in common with a number of companies in the
life assurance industry, has been carrying out a review of the past sales of
certain endowment based and long-term savings products made, primarily in the
late 1980s and early 1990s, by the Abbey Life salesforce prior to its disposal
by the Group in February 2000. The Group is now in a better position to assess
the likely implications for redress to policyholders and as a result, expects to
make a provision of approximately £165 million in its accounts for the year
ending 31 December 2002 to cover this liability.

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LLOYDS TSB - TRADING UPDATE/....3


The adequacy of the provision for redress to past purchasers of pension policies
has been reviewed as lower stockmarket levels have increased the expected
remaining cost of redress. The Group plans to make a final provision for this
purpose of £40 million in its accounts for the year ending 31 December 2002.


The 23 per cent reduction in the FTSE All Share Index in the first ten months of
2002 created adverse short-term fluctuations in investment returns totalling
£805 million during that period.


Peter Ellwood, Group Chief Executive commented "Many of the positive trends seen
in our first half performance have continued into the third quarter. However,
the economic outlook for the UK, as well as for all major world economies,
remains uncertain. The Group has performed satisfactorily in the first nine
months of the year and is well positioned to withstand the impact of a potential
further economic slowdown."


For further information:-


Investor Relations

Michael Oliver  [phone]

Director of Investor Relations

mailto:[e-mail]


Media

Terrence Collis  [phone]

Director of Group Corporate Communications

mailto:[e-mail]

IMPORTANT NOTICE


This announcement should be read in conjunction with our results announcement
for the half-year ended 30 June 2002, copies of which are available from
Investor Relations, Lloyds TSB Group plc, 71 Lombard Street, London EC3P 3BS or
on our website at www.lloydstsb.com.

This document contains certain forward-looking statements with respect to
certain of the plans of the Lloyds TSB Group, its current goals and expectations
relating to its future financial condition and performance. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. Lloyds TSB's
actual future results may differ materially from the results expressed or
implied in these forward-looking statements as a result of a variety of factors,
including UK domestic and global economic and business conditions, market
related risks such as interest rate risk and exchange rate risk in its banking
business and equity risk in its insurance businesses, unexpected changes to
regulation, changes in customer preferences, competition and other factors.
Please refer to the latest Annual Report on Form 20-F of Lloyds TSB Group filed
with the US Securities and Exchange Commission for a discussion of such factors.


                      This information is provided by RNS
            The company news service from the London Stock Exchange