Financial Results

Profit Drops At Lloyds' Wealth Management Division

Tom Burroughes, Editor, London, 26 February 2010

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The wealth management arm of UK-listed Lloyds Banking Group reported a profit of £198 million (around $302 million) in 2009, sliding by 46 per cent from a year before, while the overall banking group reported a pre-tax profit of £1.04 billion, up from £760 million.

Lloyds has been bailed out by the UK taxpayer. In 2008, it bought HBOS, another UK bank which had been heavily exposed to the property market. In 2009, Lloyds said it logged total impairments of £16.7 billion.

In other details on the wealth business’s performance, Lloyds said the wealth unit earned net interest income of £383 million, down by 14 per cent; it logged total impairments of £71 million. Lloyds’ cost/income ratio at the wealth business rose to 80.7 per cent in 2009, up from 73.3 per cent in 2008.

“In Wealth, the focus has been on driving additional income growth from the Group's affluent and high net worth client base through more effective use of the opportunities afforded by the retail and wholesale franchises to cross-sell wealth products to these customers,” the bank said in a statement today.

The total number of wealth relationship clients increased by 8 per cent to approximately 300,000 at the end of 2009, including a 13 per cent increase within UK Wealth. Net new inflows of funds under management in the year were £7 billion.

The wealth business is held within a newly formed division called Wealth and International, comprising a variety of businesses – private banking, wealth and asset management in the UK and overseas.

This entire Wealth and International group suffered a pre-tax loss of £2.356 billion, compared with a profit of £277 million in 2008.

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