The ratings on U.K.-incorporated Lloyds TSB Bank PLC (Lloyds TSB) recognize the group's excellent domestic business position, strong risk-adjusted profitability, and controlled risk profile. They also reflect Standard&Poor's Ratings Services expectation that its weak capitalization, according to our measures, will improve over the next three years. Lloyds TSB has a strong franchise in U.K. financial services across both retail and corporate sectors. International activity is extremely limited because, unlike many similarly rated European banks, it has returned most "surplus" capital to shareholders and focused on its core domestic business. Risk-adjusted earnings are strong, particularly in banking and general insurance, while life assurance profits are improving as it delivers a five-year plan to enhance volumes and margins. Accelerating revenue
