Lloyds reveals £201m credit hit

“Firmly on track” was the line from Lloyds TSB on Monday, giving the latest snapshot of how UK banks have weathered the credit storm.

RBS shares leapt last week as it provided relief with details of its exposure to subprime nasties.

There was scanter detail on offer from Lloyds – but on smaller overall exposure. Worth noting however that its numbers for marking down the value of its assets run only to the end of October, covering four months of the second half. RBS in contrast ran its assessment to the end of November – incorporating a full month more of credit turbulence and declining values – and gave an expected hit for the second half.

Lloyds TSB said it had taken a total hit of £200m, across its exposure to to CDOs of asset-backed securities, SIV notes and assets held in its trading portfolio. Excluding this impact – and a charge related to the settlement of claims over overdraft fees expected to be similar to the £36m booked in the first half – Lloyds said that results were on track to be just “broadly in line” with market expectations. Reuters was on Monday reporting consensus for pre-tax profit of £4.1bn, up 11 per cent on 2006.

The details on write-downs and exposure to the end of October were as follows:

• Writedowns of £89m on ABS CDOs, leaving exposure of £130m net of hedges
• Writedowns of £22m on SIV capital notes, leaving total exposure of £78m
• Liquidity facilities totalling £377m related to SIVs, of which £89m has been drawn down
• Exposure via liquidity backstops to Cancara, its ABCP conduit, of £11.8bn. The vehicle has no direct or indirect exposure to US residential mortgages in its £8.4bn of ABS, and £116m within the client receivables portfolio
• £90m hit to PBT from the writedown of assets in the trading portfolio, which contained £181m of indirect exposure to US subprime and ABS CDOs

Lloyds shares opened lower on Monday, trading down 1.4 per cent at 481p.