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Lloyds takes $410.6m credit write-down

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Associated Press / December 11, 2007

LONDON - Lloyds TSB PLC said yesterday it was taking a $410.6 million hit from its exposure to the global credit crisis.

The write-down was higher than the $324.8 million forecast, but analysts said that the bank, Britain's fifth-largest, benefited from a strong retail banking business.

Lloyds said its retail operations employed tighter mortgage lending standards, while the firm has continued to grow its share of current accounts and has seen "significantly improved deposits." The bank said it remained "firmly on track" to deliver a good performance in 2007.

"Whilst no bank has been immune from the recent turbulence, the relatively limited impact of the market dislocation on the group has been more than offset by the significant profit on the sales of noncore businesses," said chief executive Eric Daniels.

Shares rose 3.4 percent to $10.25.

Panmure Gordon banking analyst Sandy Chen highlighted the strength of Lloyds' retail banking business and added that the company's exposure to subprime losses was "less of a concern than [to] many of its peers."

Collins Stewart analyst Alex Potter said the update should "comfort" investors.

The $410.6 million write-down came from an array of financial instruments affected by the crunch, including a $181.8 million exposure to mortgage-backed bonds and a $183.8 million exposure to Cancara, a "conduit" firm used to raise short-term funds.

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