Widows sales are a drag on Lloyds results

SCOTTISH Widows, the insurance and pensions arm of Lloyds Banking Group, yesterday said sales slumped over the first three quarters of 2009 as customers shunned its products.<br /><br />In an interim statement timed to coincide with official confirmation of its exit from the government&rsquo;s asset protection scheme and the launch of a &pound;21bn capital raising programme, Lloyds said new life, pensions and investments sales fell 27 per cent in the first nine months of 2009.<br /><br />The group said sales via intermediary financial advisers had proved especially challenging, though this was partially offset by relative resilience in its bancassurance channel.<br /><br />Lloyds&rsquo;s said that overall, banking net interest margins had shown &ldquo;clear signs of stabilising&rdquo; over the period. It also believes impairment charges peaked in the first half of 2009, after recording overall losses from bad loan write-downs of &pound;18.6bn for the year to date.<br /><br />Chief executive Eric Daniels said that the group&rsquo;s performance had been &ldquo;robust&rdquo; in a &ldquo;challenging, albeit stabilising, economic environment&rdquo;, despite it continuing to expect to post a pre-tax loss for the full year.<br /><br />Lloyds&rsquo; cost-cutting efforts paid off over the period, with costs for the nine months to end of September&nbsp; two per cent lower than last year.<br /><br />Lloyds also said non-executive director Sir David Manning, Tony Blair&rsquo;s former foreign policy adviser, is to step down from the board just 18 months after joining the firm.<br /><br /><strong>STEPHEN HESTER<br />RBS<br /><br />ERIC DANIELS<br />LLOYDS TSB</strong><br /><br />IF there was a points contest for under-performing bank executive, Stephen Hester of RBS would almost certainly come out worst of all after his months&rsquo; long negotiations with government and regulators. <br /><br />After being told to make several significant disposals and enter into an agreement that will see the UK government own 84 per cent of the bank, Hester is understandably bruised.<br /><br />Yesterday he said Brussels&rsquo; demands were &ldquo;more material that we had hoped, increasing risk to both execution of the plan and earnings dilution.&rdquo;<br /><br />&ldquo;They (the disposals) came up rather late in the day,&rdquo; he added.<br /><br />Hester, who is reassuringly upfront and happy to explain his actions to the media and shareholders alike, looks to have been trumped in the latest round of bank bailout discussions by his more reserved rival, Lloyds chief executive Eric Daniels.<br /><br />Daniels, who can not escape responsibility for making the acquisition of the troubled HBOS in the first place, must be feeling pretty pleased with himself for the first time in ages. He has, against all odds, managed to keep the government&rsquo;s stake in his bank below 50 per cent, partly by gaining the City&rsquo;s support for a massive rights issue.<br /><br />&ldquo;Lloyds has at least been progressive in how it has extricated itself from the situation and it benefits from first mover advantage,&rdquo; says Paul Mumford, fund manager at Cavendish Asset Management. David Hellier<br />