Lloyds Banking Group Plc's Board announced an update to the trading performance of HBOS Plc (HBOS.L) and Lloyds TSB Group(LYG,LLOY.L) for the year ended 31 December 2008.
Lloyds TSB traded profitably and satisfactorily in 2008 and expects to report a profit before tax from its continuing businesses, including the impact of approximately GBP 1.3 billion from market dislocation, of some GBP 2.4 billion. On a statutory basis, adjusting for the impact of insurance volatility of GBP 0.75 billion, and aggregate provisions of GBP 0.4 billion in respect of the Financial Services Compensation Scheme levy, certain historic US dollar payments and goodwill write-downs, profit before tax is expected to be in the region of GBP 1.3 billion, before the policyholder interests volatility charge which is currently expected to be GBP 0.5 billion.
Lloyds Banking Group expects HBOS to report an underlying loss before tax of some GBP 8.5 billion for the year ended 31 December 2008.
On a statutory basis, adjusting for the impact of short term fluctuations, loss on sale of businesses, FSCS levy and goodwill impairment, the loss before tax is expected to be approximately GBP 10 billion, before the policyholder tax charge which is currently expected to be approximately GBP 0.9 billion.
The Board currently estimates that Lloyds Banking Group's Core tier 1 capital ratio at 31 December 2008 will be within the range of 6.0% - 6.5%, which is significantly in excess of its regulatory capital requirements.
On the same proforma basis, Lloyds Banking Group continues to expect its Tier 1 capital ratio, at 31 December 2008, to be in excess of 9%.
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