Lloyds TSB Debt Rising

Lloyds TSB has seen a dramatic rise in the number of people saddled with debts, as it wrote off more 'bad debt' than ever before in the last year.

Revealing profits overall had risen by four per cent, the figures masked a sharp impact on its high street banking operation from those unable to repay their loans.

The firm's retail banking arm saw a seven per cent profit slide, with the provision made for "non-performing loans" up by more than a third.

Lloyds said it had already sought to offset the issue by taking a number of actions over the course of the year to tighten credit underwriting.

"It is not in the interests of the individual customer or the group to lend money to a customer who cannot afford to repay," chief executive Eric Daniels said in a statement accompanying the profits.

"The group takes its responsibilities in this regard very seriously and has a responsible lending programme, to ensure we help our customers clearly understand the nature of the agreements they are entering into and we confirm affordability before agreeing to any borrowing requests."

Lloyds said it would be making further moves to crackdown on borrowers who were unable to meet repayments, with the implications significant for both the bank and consumers generally.

The total value of debts the bank wrote off during the year swelled to £905 million - well up on the £229 million set aside for bad debts the year before.

Banks' willingness to lend to consumers has come under increasing scrutiny recently, with calls for tighter controls on the part of the lenders.