The ratings on U.K.-incorporated Lloyds TSB Bank PLC (LTSB) recognize its excellent business position, strong banking earnings diluted by lower life assurance returns, and stable asset quality. They are constrained by its weak core capitalization by Standard&Poor's measures, which adjust for LTSB's substantial life business. LTSB's performance is driven by its extensive franchise in the U.K. retail and corporate sectors. Its traditional domestic focus was further strengthened by the disposal of various international businesses in 2003-2004. Banking and general insurance profitability is strong, but organic revenue growth has been lower than peers over recent years. The reinvigoration of LTSB's franchise is management's strategic priority, and there were encouraging signs of progress during 2004 in terms of volume growth
