UK banking giant Lloyds TSB has seen its annual profits drop by 6 per cent.

The company made a pre-tax profit of £4bn in the year ending December 31, down from £4.25bn in 2006.

Lloyds TSB said write-downs increased by £80m to £280m as a result of the turbulence in global markets.

But the firm said profits actually jumped 6 per cent when the impact of the credit crunch was excluded and the sale of businesses was included.

Because of its UK focus, Lloyds TSB has been able to stay relatively clear of investments linked to the troubled US sub-prime market.

Eric Daniels, Lloyds TSB: "2007 was another good year for Lloyds TSB. We delivered strong results, despite the more challenging operating environment that we saw in the second half of the year."

The company said it was happy with the results.

"2007 was another good year for Lloyds TSB. We delivered strong results, despite the more challenging operating environment that we saw in the second half of the year," said chief executive Eric Daniels.

"Our business performance, excluding the impact of the market dislocation, continued its strong momentum as our relationship-based strategy serves us well."

And looking ahead, the London-based company said the outlook for 2008 was positive.

"We believe our momentum will carry through to 2008, given we have a high quality, sustainable earnings stream, driven by he deep relationships we have with our customers, coupled with the significant growth potential we have both within our own franchise and in the UK market as a whole," added Mr Varley.

"As a result, we remain confident as to the group's future outlook>"

Lloyds TSB, the fourth-biggest bank in the UK, also increased its dividend by 5 per cent to 35.9p, which helped to lift it shares by 4.3 per cent to 455.5 pence.

Panmure Gordon banking analyst Sandy Chen told the BBC that the size of the write-downs was "relatively mild".

Earlier this week, Barclays, another leading UK high street bank, announced that annual profits had dropped by 1 per cent to £7.08bn.

This was a much lower loss than analysts had predicted, and was also some positive news for the UK's financial market.

The article Lloyds TSB sees annual profits drop 6% originally appeared on 999 Today