SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.20549

                                   FORM 6-K

                        Report of Foreign Private Issuer
                       Pursuant to Rule 13a-16 or 15d-16
                     of the Securities Exchange Act of 1934



                              23 February 2007

                              LLOYDS TSB GROUP plc
                (Translation of registrant's name into English)


                              5th Floor
                              25 Gresham Street
                              London
                              EC2V 7HN
                              United Kingdom


                    (Address of principal executive offices)



Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.

                          Form 20-F..X..Form 40-F.....


Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

                               Yes .....No ..X..

If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule
12g3-2(b): 82- ________



                                  Index to Exhibits

Item

No. 1         Regulatory News Service Announcement, dated 23 February 2007
              re:  Final Results





                     LLOYDS TSB GROUP PLC - 2006 RESULTS

                            PRESENTATION OF RESULTS


The impact of the implementation of International Financial Reporting Standards
(IFRS) in 2005, and in particular the increased use of fair values, has led to
greater earnings volatility than was previously the case under UK GAAP.  In
order to provide a more comparable representation of underlying business
performance, this volatility has been separately analysed for the Group's
insurance and banking businesses (page 35, note 2).  In addition, the profit and
loss on the sale and closure of businesses in 2005 has been separately analysed
in the Group's results.  A reconciliation of this basis of presentation to the
statutory profit before tax is shown on page 1.  Certain commentaries separately
analyse the impact in 2006 of the one-off pension schemes related credit and, in
2005, of customer redress provisions and the strengthening of reserves for
annuitant mortality.


For 2006, the Group has introduced supplementary financial reporting relating to
Scottish Widows Group using European Embedded Value ('EEV') Principles as
published by the Chief Financial Officers Forum in 2004.  The Group has also
aligned the accounting for insurance products which are recognised on an
embedded value basis under IFRS to a basis consistent with relevant EEV
Principles.


Unless otherwise stated the analysis throughout this document compares the year
ended 31 December 2006 to the year ended 31 December 2005.




FORWARD LOOKING STATEMENTS


This announcement contains forward looking statements with respect to the
business, strategy and plans of the Lloyds TSB Group, its current goals and
expectations relating to its future financial condition and performance.  By
their nature, forward looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur in the future.
The Group's actual future results may differ materially from the results
expressed or implied in these forward looking statements as a result of a
variety of factors, including UK domestic and global economic and business
conditions, risks concerning borrower credit quality, market related risks such
as interest rate risk and exchange rate risk in its banking business and equity
risk in its insurance businesses, changing demographic trends, unexpected
changes to regulation or regulatory actions, changes in customer preferences,
competition and other factors.  Please refer to the latest Annual Report on Form
20-F filed with the US Securities and Exchange Commission for a discussion of
such factors.  The forward looking statements contained in this announcement are
made as at the date of this announcement, and the Group undertakes no obligation
to update any of its forward looking statements.





CONTENTS
                                                                                                        
                                                                                                          Page
Profit analysis by division                                                                                  1
Assets by division                                                                                           1
Performance highlights                                                                                       2
Summary of results                                                                                           3
Group Chief Executive's statement                                                                            4
Summarised segmental analysis                                                                                8
Group Finance Director's review of financial performance                                                     9
Divisional performance:                                                                                     13
  - UK Retail Banking                                                                                       13
  - Insurance and Investments                                                                               17
  - Wholesale and International Banking                                                                     23
Consolidated income statement - statutory                                                                   27
Consolidated balance sheet - statutory                                                                      28
Consolidated statement of changes in equity - statutory                                                     29
Consolidated cash flow statement - statutory                                                                30
Condensed segmental analysis - statutory                                                                    31
Notes                                                                                                       33
Contacts for further information                                                                            52






PROFIT ANALYSIS BY DIVISION



                                                                    2006              2005             Change
                                                                    GBPm              GBPm                  %
                                                                                                 
UK Retail Banking (page 13)

- Before provisions for customer redress                           1,549             1,470                  5
- Provisions for customer redress                                      -              (150)
                                                                   1,549             1,320                 17
Insurance and Investments (page 17)

- Before strengthening of reserves for mortality                     973               880                 11
- Strengthening of reserves for mortality                              -              (155)
                                                                     973               725                 34
Wholesale and International Banking (page 23)                      1,640             1,524                  8

Central group items

- Before pension schemes related credit                             (449)             (424)                (6)
- Pension schemes related credit                                     128                 -
                                                                    (321)             (424)                24
Profit before tax - excluding volatility and                       3,841             3,145                 22

profit on sale and closure of businesses
Volatility (page 35, note 2)
- Banking                                                             (3)             (124)
- Insurance                                                           84               438
- Policyholder interests                                             326               311
Profit on sale and closure of businesses (page 43, note 13)            -                50
Profit before tax                                                  4,248             3,820                 11
Taxation                                                          (1,341)           (1,265)
Profit for the year                                                2,907             2,555                 14

Profit attributable to minority interests                            104                62
Profit attributable to equity shareholders                         2,803             2,493                 12
Profit for the year                                                2,907             2,555

Earnings per share (page 44, note 15)                              49.9p             44.6p                 12





ASSETS BY DIVISION

                                                                      31 December        31 December
                                                                             2006               2005            Change
                                                                             GBPm               GBPm                 %
UK Retail Banking                                                         108,381            102,945                 5

Insurance and Investments                                                  86,074             80,148                 7
Wholesale and International Banking                                       147,836            124,044                19
Central group items                                                         1,307              2,617
Total assets                                                              343,598            309,754                11






Page 1 of 52

PERFORMANCE HIGHLIGHTS



Commenting on the results Lloyds TSB Group chairman, Sir Victor Blank said:-

"I am delighted to report that the Group has delivered another strong
performance in 2006 - building on the improved earnings momentum that has been
achieved over the last few years.  We have a high quality, balanced set of
businesses, demonstrating increased trading momentum and I believe Lloyds TSB is
in great shape for 2007 and beyond."



Results - statutory

-           Profit before tax increased by GBP428 million, or 11 per cent, to
            GBP4,248 million.

-           Profit attributable to equity shareholders increased by 12 per cent
            to GBP2,803 million.

-           Earnings per share increased by 12 per cent to 49.9p.

-           Post-tax return on average shareholders' equity increased to 26.6
            per cent, from 25.6 per cent.

-           Total capital ratio 10.7 per cent, tier 1 capital ratio 8.2 per
            cent.

-           Final dividend of 23.5p per share, making a total of 34.2p for the
            year.



Results - excluding volatility, pension schemes related credit and, in 2005,
profit on sale and closure of businesses, customer redress provisions and
strengthening of reserves for mortality

-           Income growth of 6 per cent exceeded cost growth of 2 per cent.
            Cost:income ratio improved to 50.8 per cent, from 52.8 per cent.

-           Trading surplus increased by GBP519 million, or 11 per cent, to
            GBP5,268 million.

-           Profit before tax increased by GBP263 million, or 8 per cent, to
            GBP3,713 million.

-           Earnings per share increased by 6 per cent to 46.9p.

-           Economic profit increased by 6 per cent to GBP1,692 million.

-           Post-tax return on average shareholders' equity was broadly stable
            at 25.1 per cent.



Key operating highlights

-           Balanced and continuing trading momentum with income up 6 per cent
            and trading surplus up 11 per cent.  All divisions showing good
            growth.

-           Excellent cost control.  Income growth exceeded cost growth of 2 per
            cent, delivering widened positive jaws.  Group-wide productivity
            improvement programme ahead of schedule. In 2008, the net annual
            benefits of this programme are expected to increase to GBP250
            million.

-           Strong second half performance.  Income growth of 7 per cent
            exceeded cost growth of 3 per cent, compared to the second half of
            2005.

-           Accelerating income momentum in UK Retail Banking, with a more
            balanced sales mix.  Overall product sales up 16 per cent.  Income
            up 4 per cent, costs reduced by 2 per cent resulting in trading
            surplus increasing by 10 per cent.  Second half income growth
            accelerated to 6 per cent.

-           Excellent growth in Scottish Widows with a 24 per cent increase in
            the present value of new business premiums. Insurance and
            Investments profit before tax, adjusting for the impact of capital
            repatriation in 2005 and insurance grossing, increased by 15 per
            cent.

-           Continued strong trading momentum in Wholesale and International
            Banking supported by a 46 per cent increase in cross-selling income.
            Income growth of 8 per cent exceeded cost growth of 4 per cent;
            trading surplus increased by 14 per cent.

-           Overall credit quality remains satisfactory.  Strong corporate asset
            quality continues; retail impairment charge lower in the second half
            of 2006, compared to the first half.  Rate of growth in unsecured
            retail lending impairment charge in 2007 expected to be
            significantly lower than in 2006.



Page 2 of 52



SUMMARY OF RESULTS




                                                                           2006               2005            Change
                                                                           GBPm               GBPm                 %
                                                                                                        
Results - statutory
Total income, net of insurance claims                                    11,104             10,540                 5
Operating expenses                                                        5,301              5,471                 3
Trading surplus                                                           5,803              5,069                14
Impairment losses on loans and advances                                   1,555              1,299               (20)
Profit before tax                                                         4,248              3,820                11
Economic profit (page 44, note 14)                                        1,855              1,616                15
Profit attributable to equity shareholders                                2,803              2,493                12
Earnings per share (page 44, note 15)                                     49.9p              44.6p                12
Post-tax return on average shareholders' equity                           26.6%              25.6%


Results - excluding volatility, pension schemes related credit and, in 2005, profit on sale and closure of
businesses, customer redress provisions and strengthening of reserves for mortality

Total income, net of insurance claims                                    10,697             10,070                 6
Operating expenses                                                        5,429              5,321                (2)
Trading surplus                                                           5,268              4,749                11
Impairment losses on loans and advances                                   1,555              1,299               (20)
Profit before tax                                                         3,713              3,450                 8
Economic profit                                                           1,692              1,601                 6
Earnings per share                                                        46.9p              44.2p                 6
Post-tax return on average shareholders' equity                           25.1%              25.5%

Shareholder value
Closing market price per share (year end)                                571.5p             488.5p                17
Total market value of shareholders' equity                            GBP32.2bn          GBP27.4bn                18
Proposed dividend per share (page 51, note 20)                            34.2p              34.2p
Total shareholder return                                                  24.8%              10.9%

                                                                    31 December        31 December
                                                                           2006               2005            Change
                                                                           GBPm               GBPm                 %
Balance sheet - statutory
Shareholders' equity                                                     11,155             10,195                 9
Net assets per share (pence)                                                195                180                 8
Total assets                                                            343,598            309,754                11
Loans and advances to customers                                         188,285            174,944                 8
Customer deposits                                                       139,342            131,070                 6

Risk asset ratios
Total capital                                                             10.7%              10.9%
Tier 1 capital                                                             8.2%               7.9%




Page 3 of 52



GROUP CHIEF EXECUTIVE'S STATEMENT+


2006 was another strong year for the Group as we continued to make progress
against our strategic plan and delivered both good growth and high returns.  We
are reporting a growth in profits of 8 per cent and a 25.1 per cent return on
equity, building on the momentum established in recent years.  We also achieved
a total return for shareholders of 24.8 per cent, which compares very favourably
to our peers.


The results reflect a strong performance across each of our three divisions, as
we delivered good profitable growth in each, and once again we delivered
positive jaws as the rate of growth in income exceeded that of costs.


Our business model is based on building long lasting relationships with our
customers, meeting more of their financial needs and thereby generating
sustainable, high quality earnings growth.  Our success is reflected in higher
customer satisfaction scores, rising levels of customer recruitment and a
significant increase in sales.  We are continuing to grow strong customer
franchises that support our future development.


We have established a strong track record of driving efficiency improvements and
I am pleased that in 2006 we improved our cost:income ratio to 50.8 per cent,
from 52.8 per cent in 2005.  This was achieved by our continued commitment to a
range of quality improvement programmes such as lean manufacturing, which enable
us to enhance the service we deliver to our customers at a lower cost.  We have
extended our Groupwide efficiency programme that is also allowing us to
structurally reduce our cost base.  As we continue to improve our efficiency and
effectiveness, we are creating additional capacity for further investment to
support our future growth plans.


As we expected, we have seen signs of stabilisation in the unsecured consumer
portfolio, which resulted in a reduction in retail impairments in the second
half of the year.  This reflects our long established focus on lending to
existing customers, where we have better information, and tightening in our
credit criteria in previous periods.  Our secured consumer portfolios remain in
good shape, reflecting our traditional emphasis on the prime mortgage
marketplace.  In the Corporate sector, asset quality has remained strong, with
the increase in impairments reflecting a reduction in recoveries, compared to
last year.


One of the cornerstones of our business model is engaging our staff as we
believe this is critical to driving customer satisfaction.  I am pleased that we
again achieved record employee engagement scores in 2006.  These scores match
those achieved by other high performing companies, and reflect the focus we
place on developing our people in support of our strategy.  We have also
continued to strengthen the broader management team, which is enhancing our
ability to grow the business in a sustainable fashion.


I am pleased with the progress we made during the year.  In line with the second
phase of our strategic plan, we are building strong customer franchises,
improving our product capabilities, enhancing our processing efficiency and
working our capital harder.  We have made considerable progress across each of
the divisions.


The Retail Bank delivered a 5 per cent improvement in profit before tax, as the
rate of revenue growth accelerated from 3 per cent in the first half to 6 per
cent in the second.  The strong growth in the trading surplus, up 10 per cent,
was underpinned by positive jaws of 6 percentage points as income growth of 4
per cent was accompanied by productivity improvements that led to costs being
reduced by 2 per cent.


+ see footnote on page 7


Page 4 of 52



The Retail Bank has made considerable progress against its key priorities.  By
enhancing our customer service, re-engineering processes and developing a series
of new and innovative products and services, we are able to offer customers
compelling reasons to choose Lloyds TSB.


The success is reflected, for instance, in increased levels of new target
current account customer recruitment, which rose 59 per cent year on year.  In
addition, total sales volumes in the Retail Bank grew by 16 per cent, led by a
30 per cent increase in branch sales.  Of particular note has been the change in
the sales mix and the development of better quality, more annuity-like revenue
streams through increased volumes of savings and bancassurance products.


In Insurance and Investments, profit before tax on a like-for-like basis
increased by 15 per cent.  We have excellent income growth, of 12 per cent, and
firm cost control, which resulted in positive jaws of 6 percentage points.  Each
of the businesses within the division performed strongly and we saw good
profitable growth through both the branch network and IFA distribution channels.


Scottish Widows delivered another very good performance, with sales rising 24
per cent on the prior year and we increased our new business profit by 36 per
cent.   We continue to deliver on our bancassurance performance, with a 62 per
cent increase in sales, supported by our simplified product range and new
customer offers.  In the IFA channel, our emphasis is on growing the business
profitably and we saw an increase in sales of 14 per cent.


Scottish Widows remains very well capitalised and in addition to the payment of
a GBP206 million regular dividend to the Group in March 2006, a further GBP540
million distribution was made in December 2006.  We continue to explore a number
of opportunities to repatriate further surplus capital from Scottish Widows in
2007.


Our General Insurance business continued to grow successfully, delivering a 16
per cent growth in profits.  The results particularly reflect the growth in
sales to our franchise customers in retail and Business Banking, as well as
continued investment in enhancing our service performance and claims processing
capacity.


In Wholesale and International Banking, we made further excellent progress in
our core businesses with the division delivering an 8 per cent increase in
profit before tax.  This has been built on our two key franchises, Corporate
Markets and Business Banking, and they again delivered excellent levels of
profitable growth.  Whilst we are continuing to invest in these franchises to
support our growth ambitions, this was achieved within our discipline of
positive jaws with income growth of 8 per cent whilst costs grew by 4 per cent.
The division also includes the Asset Finance business, which was affected by the
market-wide slowdown in consumer lending and increased impairments in its retail
portfolios.


Our Corporate Markets business delivered another excellent performance, with a
13 per cent improvement in profits, supported by a 48 per cent increase in
cross-selling income.  The improvement in profitability reflects the success of
our strategy of integrating our product and relationship businesses to meet our
customers' needs.  We are continuing to receive external recognition for our
achievements and we were especially pleased to be awarded the CBI Corporate Bank
of the Year Award for the second year running in 2006.  We are maintaining our
focus on building relationships and this is helping us to sustain strong asset
quality performance in this portfolio.

Page 5 of 52





The performance in Business Banking is again underpinned by a very good
performance in sales, as we continue to attract a market leading share of
business start-ups.  We are delivering on our strategy of building deeper
customer relationships, with good levels of growth in customer lending and
deposits, as well as continuing to raise the level of fee income.  This helped
to drive growth in profits of 26 per cent.


Outlook

Turning to 2007, we are well positioned to drive further growth as we continue
to embed our business model.  Whilst we are likely to face challenges in terms
of the slower rate of growth in the unsecured consumer credit market and the
increasing cost of regulation, each of the divisions has now established a
strong track record for delivering enhanced customer satisfaction and an
improved sales performance, which is resulting in profitable business growth.
We will also continue to deliver on our productivity programmes across the
business.  In addition to improving our efficiency and effectiveness, these also
result in better customer satisfaction and enhance our ability to fund increased
investment for future growth.


We are a customer focused organisation, and our improved customer satisfaction
scores are an important factor in our continued success.  In 2007, we will
implement a further range of new products and services that meet the needs of
our customers, which are underpinned by our 'treating customers fairly'
principles and that reinforce our strategy of developing deep, long-lasting
customer relationships.   Over the past few years, we have developed a strong
risk and control infrastructure and this plays an important role in enabling us
to drive profitable growth in a controlled and sustainable fashion.


The Group's key market place is the UK, in the retail and corporate banking, and
insurance sectors.  Retail banking markets have shown strong rates of growth in
recent years, notably in unsecured consumer borrowing but the combination of
higher interest rates and higher living costs have started to normalise future
growth expectations.  We forecasted this change last year and have increasingly
focused our strategies towards non-lending related product sales and have made
good progress in growing current account, bank savings and bancassurance product
sales.  The markets for mortgage lending, bank savings and life, pensions and
investment products are expected to continue to show good rates of growth over
the next few years and this will support our growth plans.


Wholesale markets have shown strong growth over the past several years, and
cyclically low levels of bad debt.  Our opportunities in these markets centre on
deepening our customer relationships and cross-selling more fee-based products
to our corporate and small business customers.  Over the last few years, we have
increased cross-selling income substantially, and we believe there is still a
great opportunity.


In the competitive financial services market, and with customers able to
exercise choice amongst alternative providers, shareholder and customer value
creation are closely linked.  Shareholder value is created by attracting and
retaining customers and winning a greater share of their financial services
business.  We have a significant opportunity to leverage our customer
relationships to build market share in other products.  We have significant
strengths, in our portfolio of high quality brands, our customer franchises, our
multi-channel distribution capability, our high levels of customer satisfaction
and our knowledge and understanding of our customers.  Our growth will come from
leveraging these key strengths.


We believe that successful banks benefit from operating in a vibrant and healthy
society.  Many thousands of our staff participate in activities that make a
significant contribution to the communities in which they live and work.  In
addition, the four Lloyds TSB Foundations have played a significant role in
supporting a broad range of charities, across the United Kingdom, and make a
critical difference to many thousands of people.


Page 6 of 52



Summary

In summary, 2006 was another strong year for the Group.  We have delivered a
good financial performance whilst continuing to build our customer franchises to
support future earnings growth.  We will continue to extend the reach and depth
of our customer relationships whilst improving productivity and efficiency in
2007 and beyond.  In doing so, I believe that we can deliver sustained
double-digit economic profit growth over time.


Finally, let me again express my continued thanks to all of the staff who work
for the Lloyds TSB Group.  They deliver great service for our customers and
their wonderful efforts drive our growing success.  Many thousands of our staff
are also shareholders in the Group, and I am delighted that they continue to
participate in the success of the company.



J Eric Daniels

Group Chief Executive








+ to enable meaningful comparisons to be made with 2005, the commentaries in
this statement exclude volatility, the 2006 pension schemes related credit and,
in 2005, profit on sale and closure of businesses, customer redress provisions
and the strengthening of reserves for annuitant mortality.



Page 7 of 52



SUMMARISED SEGMENTAL ANALYSIS



2006                                                  Wholesale                   Group
                                  UK    Insurance           and     Central   excluding
                              Retail          and  International      group   insurance   Insurance
                             Banking  Investments**     Banking       items    gross up   gross up**      Group
                                GBPm         GBPm          GBPm        GBPm        GBPm        GBPm        GBPm
                                                                                       
Net interest income            3,642           56         2,385        (457)      5,626          78       5,704
Other income                   1,621        1,740         1,827          68       5,256       8,306      13,562
Total income                   5,263        1,796         4,212        (389)     10,882       8,384      19,266
Insurance claims                   -         (200)            -           -        (200)     (8,369)     (8,569)
Total income, net of           5,263        1,596         4,212        (389)     10,682          15      10,697

insurance claims
Operating expenses            (2,476)        (646)       (2,264)        (51)     (5,437)          8      (5,429)
Trading surplus (deficit)      2,787          950         1,948        (440)      5,245          23       5,268
Impairment losses on loans    (1,238)           -          (308)         (9)     (1,555)          -      (1,555)
and advances
Profit (loss) before tax+      1,549          950         1,640        (449)      3,690          23       3,713
Pension schemes related
credit
                                   -            -             -         128         128           -         128
Profit (loss) before tax*      1,549          950         1,640        (321)      3,818          23       3,841
Volatility
- Banking                          -            -             -          (3)         (3)          -          (3)
- Insurance                        -           84             -           -          84           -          84
- Policyholder interests           -            -             -           -           -         326         326
Profit (loss) before tax       1,549        1,034         1,640        (324)      3,899         349       4,248


2005

Net interest income            3,483           79        2,265         (393)      5,434         310       5,744
Other income                   1,574        1,587        1,628           39       4,828      11,684      16,512
Total income                   5,057        1,666        3,893         (354)     10,262      11,994      22,256
Insurance claims                   -         (197)           -            -        (197)    (11,989)    (12,186)
Total income, net of           5,057        1,469        3,893         (354)     10,065           5      10,070

insurance claims
Operating expenses            (2,522)        (607)      (2,181)         (24)     (5,334)         13      (5,321)
Trading surplus (deficit)      2,535          862        1,712         (378)      4,731          18       4,749
Impairment losses on          (1,065)           -         (188)         (46)     (1,299)          -      (1,299)
loans and advances
Profit (loss) before tax+      1,470          862        1,524         (424)      3,432          18       3,450
Customer redress                (150)           -            -            -        (150)          -        (150)
provisions
Strengthening of reserves
for mortality
                                   -         (155)           -            -        (155)          -        (155)
Profit (loss) before tax*      1,320          707        1,524         (424)      3,127          18       3,145
Volatility
- Banking                          -            -            -         (124)       (124)          -        (124)
- Insurance                        -          438            -            -         438           -         438
- Policyholder interests           -            -            -            -           -         311         311
Profit (loss) on sale and          -            -           (6)          56          50           -          50
closure of businesses
Profit (loss) before tax       1,320        1,145        1,518         (492)      3,491         329       3,820




* excluding volatility and, in 2005, profit (loss) on sale and closure of
businesses; + also excludes pension schemes related credit and, in 2005,
customer redress provisions and the strengthening of reserves for mortality.

** the Group's income statement includes substantial amounts of income and
expenditure which are attributable to the policyholders of the Group's long-term
assurance funds.  These items have no impact upon the profit attributable to
equity shareholders and are separately analysed within the segmental analysis in
order to provide a clearer representation of the underlying trends within the
Insurance and Investments segment.



In the summarised segmental analysis above, the results of the Goldfish
business, which was sold in December 2005, are included in Central group items.



Page 8 of 52

GROUP FINANCE DIRECTOR'S REVIEW OF FINANCIAL PERFORMANCE


In 2006, statutory profit before tax was GBP4,248 million, an increase of GBP428
million, or 11 per cent, compared to GBP3,820 million in 2005.  Profit
attributable to equity shareholders increased by GBP310 million, or 12 per cent,
to GBP2,803 million and earnings per share increased by 12 per cent to 49.9p.


To enable meaningful comparisons to be made with 2005, the income statement
commentaries below exclude volatility, the 2006 pension schemes related credit
and, in 2005, profit on sale and closure of businesses, customer redress
provisions and the strengthening of reserves for annuitant mortality.


Continued earnings momentum

Profit  before tax  increased  by GBP263  million,  or 8 per cent,  to  GBP3,713
million, underpinned by continued momentum in all divisions. Revenue growth of 6
per cent  exceeded  cost  growth of 2 per cent,  with each  division  delivering
stronger  year-on-year  revenue growth than cost growth.  Our strategy to deepen
customer  relationships  at the same time as improving  productivity  has led to
strong levels of trading  surplus  growth in each  division.  Earnings per share
increased  by 6 per cent to 46.9p and  economic  profit also  increased by 6 per
cent to GBP1,692 million.  The post-tax return on average  shareholders'  equity
remains strong at 25.1 per cent.


Balanced income growth

Overall income growth of 6 per cent reflects good progress in delivering our
strategies of increasing income from both new and existing customers, with good
growth in both assets and liabilities, as well as increased fee income.


Group net interest income, excluding insurance grossing, increased by GBP192
million, or 4 per cent.  Strong levels of customer lending growth in Business
Banking and Corporate Markets, and good growth in mortgages, more than offset
the expected slowdown in the rate of growth in unsecured personal lending.
Total assets increased by 11 per cent to GBP344 billion, with an 8 per cent
increase in loans and advances to customers.  Customer deposits increased by 6
per cent to GBP139 billion, supported by good growth in current account credit
balances and savings balances in the retail bank.


The net interest margin from our banking businesses (page 37, note 4) decreased
by 11 basis points, from 3.11 per cent in 2005 to 3.00 per cent in 2006.  Whilst
individual product margins were broadly stable, stronger growth in finer margin
mortgage and corporate lending led to a negative mix effect which accounted for
8 basis points of the margin decline.


Other  income,  net  of  insurance  claims  and  excluding  insurance  grossing,
increased by GBP425 million, or 9 per cent, to GBP5,056 million.  This reflected
an improvement in fees and  commissions  receivable as a result of higher income
from strong growth in added value current accounts and private banking fees, and
an increase in Open-ended  Investment  Company (OEIC) sales.  In addition,  good
growth was achieved in cross-selling income from sales and structuring, and debt
capital markets activities within Corporate Markets.


Page 9 of 52




Excellent cost control

The Group  continues  to make  significant  investment  in  improving  levels of
service quality and processing efficiency,  the benefits of which are seen in an
excellent cost performance.  During 2006, operating expenses increased by only 2
per cent to GBP5,429 million. Over the last 12 months, staff numbers have fallen
by 4,167 (6 per cent) to 62,630,  largely as a result of greater  efficiency  in
back office processing centres,  where the unit costs of transaction  processing
continue to fall, and the increased automation of administration  carried out in
the  branch  network.  These  improvements  in  operational  effectiveness  have
resulted in a Group cost:income ratio which is 2 percentage points lower at 50.8
per cent.


The Group's programme of productivity  improvement  initiatives has exceeded its
2006  target,  delivering  net  benefits of GBP47  million,  largely  reflecting
earlier than expected procurement benefits. In 2006 we invested GBP95 million in
a number of initiatives,  and delivered benefits of GBP142 million. During 2007,
we expect net benefits to total  approximately  GBP125 million and, in 2008, the
Group  expects to increase  the net annual  benefits of the  programme  to circa
GBP250 million.


Satisfactory asset quality

Impairment losses on loans and advances increased by 20 per cent to GBP1,555
million.  Our impairment charge expressed as a percentage of average lending was
0.83 per cent, compared to 0.76 per cent in 2005 (page 40, note 9).  Impaired
assets were 3 per cent lower at GBP4,006 million, and now represent 2.0 per cent
of total lending, down from 2.3 per cent at 31 December 2005.


In UK Retail  Banking,  impairment  losses on loans and  advances  increased  by
GBP173 million,  or 16 per cent, to GBP1,238 million,  reflecting more customers
with higher levels of indebtedness experiencing repayment difficulties,  as well
as higher levels of customer  insolvency.  As a result of tightening  our credit
criteria  the  quality  of new  business  written  over the last two  years  has
improved. This, as well as improvements in the Group's collection procedures and
better than  assumed  recoveries,  has  resulted  in a  reduction  in the retail
impairment charge in the second half of 2006, compared to the first half.


Towards the end of 2006 we experienced  some signs of  stabilisation in the rate
of our customers  filing for  bankruptcy and a slowdown in the rate of growth in
Individual Voluntary  Arrangements (IVAs). In addition, the increased sharing of
industry-wide  customer data,  particularly  with regard to credit card use, has
improved our customer understanding further and this has led to a reduction in a
number of credit  limits.  Whilst the rate of growth in the number of  customers
filing for  bankruptcy  and IVAs  remains a key factor in the outlook for retail
impairment,  we expect that the rate of growth in the unsecured  retail  lending
impairment  charge in 2007 will be significantly  lower than that experienced in
2006.


As expected, the Wholesale and International Banking charge for impairment
losses on loans and advances increased by GBP120 million to GBP308 million,
reflecting lower levels of releases and recoveries in Corporate Markets than in
2005, and a higher level of consumer finance lending impairment in the Asset
Finance business.  Overall asset quality remains good and the level of new
corporate provisions remained at a low level in 2006, although we expect a
return to more normal levels of impairment over time.


Page 10 of 52



Capital position remains robust

At the end of December 2006, the total capital ratio was 10.7 per cent and the
tier 1 ratio 8.2 per cent.  During the year, risk-weighted assets increased by 8
per cent to GBP156.0 billion, as strong growth in our mortgage and Corporate
Markets businesses was partly offset by the impact of the Group's new
securitisation programme.  The Board has decided to maintain the final dividend
at 23.5p per share, to make a total for the year of 34.2p.  This represents a
dividend yield for shareholders of 6 per cent, calculated using the 31 December
2006 share price of 571.5p.


Over the last 12 months, we have significantly improved our capital flexibility
through the initiation of our securitisation programme and the repatriation of
further capital from Scottish Widows to the Group.  We have also increased the
variety and flexibility of our capital raising programme, with the issuance of
both sterling and US dollar preference shares, resulting in a more balanced
capital structure.  During 2006, we completed two mortgage securitisation
transactions totalling over GBP10 billion as well as a GBP1 billion synthetic
securitisation of commercial banking loans.  Over the next few years, we expect
to expand our securitisation programme to include a broader range of asset
classes.


Scottish Widows remains strongly capitalised and, at the end of December 2006,
the working capital ratio of the Scottish Widows Long Term Fund was an estimated
18.9 per cent (page 45, note 16) and the risk capital margin was covered over 17
times.  In the second half of 2006, an additional capital repatriation of GBP540
million was made to the Group, bringing the total for the year to approximately
GBP750 million.  This is in addition to capital repatriation of GBP1 billion in
2005.  We continue to examine opportunities to improve our capital efficiency
and have work under way that we believe will allow Scottish Widows to repatriate
further capital to the Group in 2007, whilst maintaining a strong capital
position.


The Group is making good progress in its preparations for the introduction of
Basel 2.  We commenced parallel running at the end of 2006, and our credit risk
waiver application was submitted in December 2006.  Whilst our work is well
advanced, some uncertainty remains with regard to the regulatory treatment of
certain issues for capital purposes.  The Group expects to maintain satisfactory
capital ratios throughout the transition to Basel 2 in 2008, and continues to
expect no deduction of investments in insurance subsidiaries from tier 1 capital
until at least 2012.


Introduction of EEV reporting

Under IFRS, only insurance policies and discretionary participating investment
business are accounted for on an embedded value basis.  In 2006, this basis has
been revised to be consistent with relevant EEV Principles.  Although there is
no impact on the 2005 income statement, the impact on the 2006 income statement
is to reduce profit before tax, excluding volatility, by GBP18 million (page 34,
note 1).  In line with industry best practice, the Group has introduced
supplementary disclosures which show life, pension and OEIC products accounted
for on an EEV basis, as we believe that EEV reporting provides for increased
clarity, transparency and comparability of financial information.


On an IFRS basis, Scottish Widows' 2006 profit before tax, excluding volatility,
totalled  GBP730  million,  whilst on an EEV  basis,  2006  profit  before  tax,
excluding   volatility  and  other  non-recurring  items,  was  GBP852  million.
Similarly,  the embedded  value on an EEV basis at 31 December 2006 was GBP6,413
million  (2005:  GBP6,386  million),  compared to the embedded  value on an IFRS
basis of GBP5,368 million (2005: GBP5,478 million).

Page 11 of 52



Improved Group pension schemes position

The Group's defined benefit pension schemes' gross deficit at 31 December 2006
improved by GBP1,195 million to GBP2,099 million, comprising net recognised
liabilities of GBP2,362 million partly offset by unrecognised actuarial gains of
GBP263 million (page 41, note 10).  This improvement largely reflects continued
strong returns from the schemes' assets, Group contributions to the schemes and
an increase in the real discount rate used to value the schemes' liabilities.
The decision to stop augmenting the pension entitlement of employees taking
early retirement reduced the pension deficit by GBP129 million.


In 2006,  the Group  reached  agreement  with the  Trustees  of the  Group's two
principal  pension schemes to fund the schemes'  actuarial  funding  deficits of
approximately  GBP1.5  billion,  as at 30 June 2005, over a period of ten years.
The  Group  also  indicated  that it  expected  to  continue  making  additional
voluntary contributions to the schemes.  Further interim actuarial valuations of
the schemes were  carried out on behalf of the  schemes'  Trustees as at 30 June
2006;  these  valuations  showed a  significant  reduction  in the  deficits  to
approximately GBP0.3 billion.


Delivering strong and balanced trading momentum

During 2006, the Group has delivered strong and balanced trading momentum, with
good sales growth, across all of the divisions.  Substantial improvements in
productivity and operational efficiency have resulted in excellent cost control
and widened positive jaws.  Asset quality remains satisfactory, our post-tax
return on equity remains high, economic profit continues to increase and we have
a robust capital position.




Helen A Weir

Group Finance Director








Page 12 of 52

DIVISIONAL PERFORMANCE


UK RETAIL BANKING



                                                                     2006              2005           Change
                                                                     GBPm              GBPm                %
                                                                                                 
Net interest income                                                 3,642             3,483                5
Other income                                                        1,621             1,574                3
Total income                                                        5,263             5,057                4
Operating expenses                                                 (2,476)           (2,522)               2
Trading surplus                                                     2,787             2,535               10
Impairment losses on loans and advances                            (1,238)           (1,065)             (16)
Profit before tax, before provisions for customer redress           1,549             1,470                5
Provisions for customer redress                                         -              (150)

Profit before tax*                                                  1,549             1,320               17
*excluding profit on sale and closure of businesses

Cost:income ratio, before provisions for customer redress           47.0%             49.9%

                                                              31 December       31 December
                                                                     2006              2005
Total assets                                                   GBP108.4bn        GBP102.9bn                5
Risk-weighted assets - post securitisation                      GBP59.1bn         GBP60.4bn               (2)
Risk-weighted assets - pre securitisation                       GBP64.2bn         GBP60.4bn                6
Customer deposits                                               GBP75.7bn         GBP71.0bn                7




Key highlights

-           Good income growth of 4 per cent, supported by a second half
            acceleration to 6 per cent.

-           Strong sales growth in each key distribution channel beginning to
            drive higher revenue growth.  Overall sales up 16 per cent.
            Significant progress in the rebalancing of sales mix towards a
            broader set of products, with a continued focus on non-lending
            related revenue streams.

-           Excellent progress in growing the current account customer
            franchise, with a 59 per cent increase in target customer current
            account recruitment.

-           Excellent cost control, with a clear focus on improving processing
            efficiency and service quality.  2006 costs 2 per cent lower than in
            2005. Positive jaws widened.  Substantial improvement in cost:income
            ratio.

-           Rate of growth in impairment charge expected to slow significantly
            in 2007.  Impairment charge up 16 per cent, reflecting marketwide
            deterioration in retail credit quality, however second half charge
            lower than that in the first half.

-           Continued improvements in levels of customer satisfaction.



Page 13 of 52



UK RETAIL BANKING (continued)


Profit  before  tax from UK  Retail  Banking,  before  provisions  for  customer
redress,  increased by GBP79  million,  or 5 per cent, to GBP1,549  million,  as
strong  levels of business  growth  were  partly  offset by the impact of higher
impairment  losses.  Increased  income  from the  Group's  mortgage  lending and
customer  deposit  portfolios  more than  offset the  impact of lower  levels of
unsecured  consumer  lending  and  related  insurance  products.   Total  income
increased  by GBP206  million,  or 4 per  cent,  notwithstanding  a  significant
decrease in income from creditor insurance,  whilst costs fell by 2 per cent. As
a result, the trading surplus increased by 10 per cent.


Product net interest banking margins remained broadly stable as lower personal
loan margins were offset by improved deposit and credit card margins.  The
adverse mix effect of finer margin mortgages growing faster than unsecured
personal lending led to a slight overall reduction in the divisional margin.


Operating expenses, excluding provisions for customer redress, remained very
well controlled, decreasing by 2 per cent.  The significant improvements made in
the rationalisation of back office operations to improve efficiency have been
combined with a substantial improvement in the levels of customer service and
satisfaction.  We continue to increase the proportion of front office to back
office staff in the branch network and have substantially improved our sales
productivity.


During 2006, UK Retail Banking has made substantial progress in each of its key
strategic priorities: growing income from its existing customer base; expanding
its customer franchise; and improving productivity and efficiency.  In each of
these areas, a key focus has been on improving sales of recurring income
products, such as savings and bancassurance products.  This has started to
generate a better quality, more annuity-like, revenue stream and has supported
the accelerating rate of revenue growth in the second half of 2006, compared to
that in the first half of the year.


Growing income from the customer base

Overall sales increased by 16 per cent, with strong performance improvements in
each key distribution channel and over a broad range of products, particularly
current accounts, bank savings and OEICs.  This growth has been supported by
higher levels of new product innovation during the year with the launch, for
example, of enhanced regular savings products.  In addition, a number of
improved service initiatives, such as the introduction of instant cheque value
and the recent 'Save the Change' launch, have been made.  These have improved
both customer value and our brand perception and will, we believe, create
further shareholder value over time.


Over the last 12 months, substantial progress has been made in re-balancing the
sales mix towards an increasing focus on non-lending related income streams,
with a significant year-on-year increase in the sale of added value current
accounts, bank savings products, bancassurance products and in the level of
retail bank customer introductions to the Group's wealth management business.
Our wider savings product range has led to an improved market share of bank
savings and an increase in savings margins.  Credit balances on current accounts
and savings and investment accounts increased by 7 per cent to GBP75.7 billion,
supported by good growth in Wealth Management and bank savings.  Branch network
sales rose by 30 per cent and product sales via the internet and telephone
increased by 33 per cent as customers increasingly choose to buy through direct
channels as well as through our branches.  These increases were offset by a 15
per cent reduction in sales from direct mail, following a significant reduction
in our direct mailing activity, particularly in the credit card market.


Page 14 of 52


UK RETAIL BANKING (continued)


The Group has also continued to deliver good levels of growth in the mortgage
business, particularly focusing on better quality, prime mortgage business and
seeking to maintain economic returns in what, in 2006, was a competitive market.
Gross new mortgage lending for the Group totalled GBP27.6 billion (2005: GBP26.0
billion).  Mortgage balances outstanding increased by 8 per cent to GBP95.3
billion and net new lending totalled GBP6.9 billion, resulting in a market share
of net new lending of approximately 10 per cent of the prime mortgage market and
6.3 per cent of the overall mortgage market.


In unsecured consumer lending, tightening of credit criteria over the last two
years, together with the slowdown in consumer demand, has led to unsecured
consumer credit balances remaining at broadly the same level as last year end.
Personal loan balances outstanding at the year end were GBP11.1 billion, an
increase of 1 per cent, and credit card balances totalled GBP6.9 billion, a
decrease of 5 per cent.


Expanding the customer franchise

In addition to growing product sales from existing customers, the Group has made
excellent progress in expanding its customer franchise.  Target customer current
account recruitment increased by 59 per cent, compared with last year.  With a
renewed focus on the student and graduate market, the Group has also made
considerable progress, and this has led to a 133 per cent increase in student
account recruitment and a doubling of market share in this market.


Wealth Management continues to make strong progress.  The Investment Portfolio
Service (IPS), launched in 2005, continues to attract both existing and new
clients.  Approximately two thirds of our existing clients have now moved across
to IPS whilst new client recruitment is up 86 per cent and new funds under
management have grown by 88 per cent.  Wealth protection sales have also seen
good growth and banking deposits are up 16 per cent.  This trend is expected to
continue as we roll out further expansion plans, which include making more
Private Bankers accessible to customers in key locations and reducing the
complexity and cost of our private banking offers.


Improving productivity and efficiency

During 2006 we have made significant progress in reducing levels of
administration and processing work carried out in branches, and increasing the
number of branch network staff in customer facing areas and activities.  This
has resulted in a significant increase in sales and service resource, a higher
level of product sales and a reduction of approximately 1,900 branch back-office
administration roles.  In addition, substantial progress has been made in
improving and streamlining sales processes leading to a significant increase in
seller effectiveness, with more product sales per customer interview, and
significant reductions in the time taken to, for example, open a current account
or transfer an account to us from another banking provider.


Page 15 of 52



UK RETAIL BANKING (continued)


Impairment growth expected to slow significantly in 2007

Impairment losses on loans and advances  increased by GBP173 million,  or 16 per
cent, to GBP1,238  million,  reflecting the impact of more customers with higher
levels of indebtedness experiencing repayment difficulties, and higher levels of
bankruptcies and IVAs. The impairment  charge as a percentage of average lending
was 1.18 per cent,  compared to 1.09 per cent last year. Over 99 per cent of new
personal  loans and 84 per cent of new  credit  cards sold  during  2006 were to
existing customers,  where the Group has a better understanding of an individual
customer's total financial  position.  Mortgage credit quality remains good and,
as a result,  the  impairment  charge was GBP5 million lower at GBP8 million for
the year.


The rate of growth in the number of our customers filing for bankruptcy and IVAs
remains a key factor in the outlook for retail impairment.  Towards the end of
2006 we experienced some signs of stabilisation in the rate of customer
bankruptcies and a slowdown in the rate of growth in IVAs.  As a result, we
believe that the rate of growth in the retail lending impairment charge in 2007
will be significantly lower than that experienced in 2006.


Page 16 of 52


INSURANCE AND INVESTMENTS



Excluding volatility                                                  2006               2005          Change
                                                                      GBPm               GBPm               %
                                                                                                  
Net interest income                                                     56                 79             (29)
Other income                                                         1,740              1,587              10
Total income                                                         1,796              1,666               8
Insurance claims                                                      (200)              (197)             (2)
Total income, net of insurance claims                                1,596              1,469               9
Operating expenses                                                    (646)              (607)             (6)
Insurance grossing adjustment (see page 8)                              23                 18
Profit before tax, before strengthening of reserves for                973                880              11
mortality
Strengthening of reserves for mortality                                  -               (155)
Profit before tax                                                      973                725              34


Profit before tax analysis
Life, pensions and OEICs*                                              701                655               7
General insurance                                                      243                209              16
Scottish Widows Investment Partnership                                  29                 16              81
Profit before tax*                                                     973                880              11

Present value of new business premiums (PVNBP)                       9,740              7,842              24
PVNBP new business margin (EEV basis)                                 3.6%               3.2%

*excluding, in 2005, strengthening of reserves for mortality



Key highlights

-           Significantly improved profit performance.  Profit before tax,
            excluding strengthening of reserves for mortality, increased by 11
            per cent to GBP973 million.  On a like-for-like basis, adjusting for
            the impact of the GBP800 million capital repatriation in December
            2005, profit before tax increased by 15 per cent.

-           Good income growth.  On a similar like-for-like basis, income, net
            of insurance claims, increased by 12 per cent, exceeding cost growth
            of 6 per cent.

-           Excellent sales performance.  24 per cent increase in Scottish
            Widows' present value of new business premiums.

            -        Excellent progress in increasing bancassurance sales, up
                     62 per cent, with OEIC sales more than doubled.

            -        Good momentum maintained in sales through Independent
                     Financial Advisers.  Sales increased by 14 per cent,
                     reflecting excellent growth in the sales of corporate
                     pension products.

-           Improved profitability.  Life, pensions and OEICs new business
            profit in Scottish Widows increased by 36 per cent and the post-tax
            return on embedded value increased to 9.3 per cent.  Good
            improvement in new business margin, on an EEV basis, to 3.6 per
            cent.

-           Excellent capital position of Scottish Widows maintained.  Scottish
            Widows continues to deliver improving capital efficiency and
            self-financing growth, and a further GBP540 million of capital was
            repatriated to the Group in the second half of 2006.

Good progress with General Insurance's strategy to develop its manufacturing
business and build distribution capability.  Clear focus on improving
underwriting, supply chain efficiency and claims management contributed to
profit before tax increasing by 16 per cent.


Page 17 of 52


INSURANCE AND INVESTMENTS (continued)


Scottish Widows Life, Pensions and OEICs


Profit before tax increased by GBP46 million,  or 7 per cent, to GBP701 million.
In December 2005,  Scottish Widows repatriated GBP800 million of surplus capital
to the  Group  as  part  of a  capital  restructuring  programme.  This  capital
repatriation  has the effect of  reducing  investment  earnings  and  increasing
funding  charges by a total of GBP38  million in 2006.  Adjusting  2005 for this
impact, profit before tax increased by 14 per cent.


During 2006 Scottish Widows has made strong progress in each of its key business
priorities: to maximise bancassurance success; to profitably grow IFA sales; to
improve service and operational efficiency and to optimise capital management.


Maximising bancassurance success

In 2006, Scottish Widows' bancassurance sales increased by 62 per cent, building
on the success of the simplified product range for distribution through the
Lloyds TSB branch network, Business Banking and Wealth Management channels.
Sales of OEICs were particularly strong, more than doubling year on year through
the bancassurance channel.  Towards the end of 2006, Scottish Widows launched a
new protection product platform 'Protection for Life', which is expected to
result in an increase in protection sales during 2007.  In addition, in early
2007 a new protected OEIC product was launched in the bancassurance market to
support sales of savings and investment products.


Profitably growing IFA sales

Sales through the IFA distribution channel increased by 14 per cent, largely
reflecting the introduction of improved product and service offerings for
corporate pensions which, together with increased promotional activity, resulted
in excellent growth in corporate pension sales via the IFA channel, and good
levels of post A-Day growth in retirement income products.  Scottish Widows has
also developed a new pensions platform for launch in early 2007 to support
future pre and post retirement sales, and continues to increase its segmental
focus on the IFA market to ensure maximum value is obtained from this market.


Improving service and operational efficiency

Operational efficiencies have continued to improve during 2006, and expense
growth has been controlled to significantly below the rate of income growth.
Scottish Widows' customer satisfaction levels continued to improve, as did
levels of IFA satisfaction.  Scottish Widows has again won a significant number
of awards for service quality.


Optimising capital management

Scottish Widows' strong capital management has been reinforced by continuing to
deliver improving capital efficiency and self-financing growth, a more capital
efficient product profile, and improved internal rates of return and new
business margins.  As a result, the post-tax return on embedded value increased
to 9.3 per cent, from 8.0 per cent last year.  During 2006, surplus capital
generated, excluding volatility and non-recurring items, in excess of the
regular annual dividend totalled GBP227 million.  GBP540 million of capital was
repatriated to Lloyds TSB in December 2006, giving a total capital repatriation
to the Group of over GBP1.7 billion over the last two years.  We continue to
explore a number of opportunities to repatriate surplus capital from Scottish
Widows, in order to further improve capital efficiency.


Page 18 of 52


INSURANCE AND INVESTMENTS (continued)


Industry practice has historically been to measure new business sales on a
weighted Annual Premium Equivalent (APE) basis, where APE is calculated as the
value of regular premium sales plus 10 per cent of single premium sales (page
50, note 18).  Industry practice is moving towards an alternative basis of
calculation - Present Value of New Business Premiums (PVNBP).  This is
calculated as the value of single premiums plus the discounted present value of
future expected regular premiums.  An analysis of new business sales on a PVNBP
basis can be found in the following table.



Present value of new business premiums (PVNBP)                              2006              2005            Change
                                                                            GBPm              GBPm                 %
                                                                                                         
Life and pensions:
Savings and investments                                                    1,300             1,465               (11)
Protection                                                                   232               255                (9)
Individual pensions                                                        2,219             2,197                 1
Corporate and other pensions                                               1,961             1,517                29
Retirement income                                                            960               658                46
Managed fund business                                                        348               535               (35)
Life and pensions                                                          7,020             6,627                 6
OEICs                                                                      2,720             1,215               124
Life, pensions and OEICs                                                   9,740             7,842                24

Single premium business                                                    7,321             5,636                30
Regular premium business                                                   2,419             2,206                10
Life, pensions and OEICs                                                   9,740             7,842                24

Bancassurance                                                              3,421             2,114                62
Independent financial advisers                                             5,358             4,698                14
Direct                                                                       613               495                24
Managed fund business                                                        348               535               (35)
Life, pensions and OEICs                                                   9,740             7,842                24

New business margin (PVNBP)                                                 3.6%              3.2%



Overall,  sales in 2006  increased  by 24 per cent  reflecting,  in  particular,
strong   growth  in  the  sales  of  OEICs  and  corporate   pension   products.
Bancassurance  sales  improved  significantly  and  were 62 per cent  higher  at
GBP3,421 million,  including  excellent growth in the sales of OEICs through the
branch network and to Lloyds TSB private banking clients.  IFA sales grew 14 per
cent  to  GBP5,358  million,   supported  by  significant  product  and  service
enhancements in pensions and retirement income.  Sales of savings and investment
products  declined during the year,  following the limiting of investment in the
Property  Fund in June  2006,  but this  reduction  was more  than  offset  by a
significant increase in the sale of OEIC and pension products.



Page 19 of 52



INSURANCE AND INVESTMENTS (continued)


Results on a European Embedded Value (EEV) basis

In May 2004, the Chief Financial Officers Forum ('CFO Forum') published its
European Embedded Value Principles and Guidance which set out a series of agreed
standards for embedded value reporting.  These EEV Principles establish a
consistent treatment for the financial information provided for insurance and
investment contracts and, in our view, allow a fuller recognition of the
economic value being created.  Compared with traditional embedded value, EEV
Principles also provide a more appropriate valuation of      in-force business
which explicitly takes into account the cost of financial options and
guarantees, and required capital, as well as non-market risks, such as
mortality.


Lloyds TSB continues to report under IFRS, however, in line with industry best
practice, the Group has introduced supplementary financial reporting relating to
Scottish Widows on an EEV basis.  The following EEV supplementary results have
been prepared in accordance with the CFO Forum's EEV Principles and Guidance.


Full details of the Group's adoption of EEV Principles are available on the
Group's website at www.investorrelations.lloydstsb.com



Page 20 of 52



INSURANCE AND INVESTMENTS (continued)



                                              2006                                 2005
                              Life and        OEICS       Total    Life and                   Total      Change
                              Pensions                             Pensions       OEICS                       %
                                  GBPm        GBPm         GBPm        GBPm        GBPm        GBPm
                                                                                       
New business profit                287          59          346         231          23         254          36
Existing business
- Expected return                  361          42          403         330          31         361          12
- Experience variances              35          34           69           5           7          12
- Assumption changes              (129)         (4)        (133)       (147)          -        (147)
                                   267          72          339         188          38         226          50
Expected return on                 160           7          167         202           7         209         (20)
shareholders' net assets
Profit before tax,                 714         138          852         621          68         689          24
adjusted for capital
repatriation*
Impact of GBP800 million             -           -            -          38           -          38
capital repatriation to
Group
Profit before tax*                 714         138          852         659          68         727          17

New business margin (PVNBP)       4.1%        2.2%         3.6%        3.5%        1.9%        3.2%

Post-tax return on                                         9.3%                                8.0%
embedded value*

*excluding volatility, other items and, in 2005, the strengthening of reserves for mortality.



Adjusting for the impact of last year's capital repatriation, EEV profit before
tax from the Group's life, pensions and OEICs business increased by 24 per cent
to GBP852 million.  The Group's strategy to improve its returns by focusing on
more profitable, less capital intensive, business whilst constantly seeking to
improve process and distribution efficiency has led to a 36 per cent increase in
new business profit to GBP346 million.  As a result of improvements in key
individual product margins and strong sales of corporate pensions and OEICs the
new business margin increased to 3.6 per cent, compared with 3.2 per cent for
2005.


Existing business profit increased by 50 per cent.  Expected return has
increased by 12 per cent to GBP403 million reflecting higher earnings on the
larger value of in-force business at the start of the year.  Positive experience
variances were driven by lower than expected take-up rates on guaranteed annuity
options in Life and Pensions and by favourable lapse experience in OEICs.  These
were more than offset by negative assumption changes, primarily in respect of
lapse assumptions in Life and Pensions, and resulted in an overall net charge
for experience variances and assumption changes, on an EEV basis, of GBP64
million.  The equivalent net charge on an IFRS basis was GBP7 million.  The
expected return on shareholders' net assets has decreased, largely as a result
of lower assumed rates of return on free assets.


Overall the post-tax return on embedded value increased to 9.3 per cent from 8.0
per cent.


Scottish Widows Investment Partnership

Pre-tax profit from Scottish Widows Investment  Partnership  (SWIP) increased to
GBP29  million,  compared  with  GBP16  million  in 2005,  reflecting  increased
revenues from higher funds under management throughout the period. SWIP's assets
under management  increased by 7 per cent to GBP102 billion, and Groupwide funds
under management increased by 4 per cent to GBP126 billion.


Page 21 of 52



INSURANCE AND INVESTMENTS (continued)


General insurance


                                                                            2006              2005            Change
                                                                            GBPm              GBPm                 %
                                                                                                         
Commission receivable                                                        629               681                (8)
Commission payable                                                          (664)             (695)                4
Underwriting income (net of reinsurance)                                     600               562                 7
Other income                                                                  35                18
Net operating income                                                         600               566                 6
Claims paid on insurance contracts (net of reinsurance)                     (200)             (197)               (2)
Operating income, net of claims                                              400               369                 8

Operating expenses                                                          (157)             (160)                2
Profit before tax                                                            243               209                16


Claims ratio                                                                 32%               34%
Combined ratio                                                               80%               81%



Profit before tax from our general insurance operations increased by GBP34
million, or 16 per cent, to GBP243 million.  Operating income, net of claims,
increased by 8 per cent whilst costs fell by 2 per cent.  Good progress
continues to be made in implementing new platforms for underwriting and claims
processes.


Net operating income improved by GBP34 million, or 6 per cent, as 7 per cent
growth in underwriting income was offset by a reduction in broking commissions,
particularly relating to creditor insurance, and associated profit sharing
commissions.  The Group's corporate partnering capability was further extended
during 2006 with new distribution agreements secured with Argos and Pearl Group.


Excluding the impact of lower creditor insurance business, new sales through the
UK Retail Bank have been robust, with a 42 per cent increase in home insurance
gross written premiums.  Our presence in the small business insurance market
continues to improve with an increase of 10 per cent in new business gross
written premiums.  Internet sales are becoming increasingly important and now
represent 33 per cent of direct sales volumes.


Whilst claims increased slightly to GBP200 million, the claims ratio improved to
32 per cent (2005: 34 per cent), as further progress in re-engineering the
claims process and improvements in the cost effectiveness of the claims supply
chain offset the impact of higher subsidence related claims.  The combined ratio
relating to the underwriting business improved to 80 per cent.


Page 22 of 52


WHOLESALE AND INTERNATIONAL BANKING



                                                                             2006               2005            Change
                                                                             GBPm               GBPm                 %
                                                                                                          
Net interest income                                                         2,385              2,265                 5
Other income                                                                1,827              1,628                12
Total income                                                                4,212              3,893                 8
Operating expenses                                                         (2,264)            (2,181)               (4)
Trading surplus                                                             1,948              1,712                14
Impairment losses on loans and advances                                      (308)              (188)              (64)
Profit before tax                                                           1,640              1,524                 8

Cost:income ratio                                                           53.8%              56.0%

                                                                      31 December        31 December
                                                                             2006               2005
Total assets                                                           GBP147.8bn         GBP124.0bn                19
Risk-weighted assets - post securitisation                              GBP91.8bn          GBP80.1bn                15
Risk-weighted assets - pre securitisation                               GBP92.6bn          GBP80.1bn                16
Customer deposits                                                       GBP61.2bn          GBP57.9bn                 6

Profit before tax by business unit
Corporate Markets                                                           1,105                976                13
Business Banking                                                              247                196                26
Asset Finance                                                                 190                219               (13)
International Banking and other businesses                                     98                133               (26)
                                                                            1,640              1,524                 8




Key highlights

-           Continued strong trading momentum.  Substantial increase in trading
            surplus, up 14 per cent, to GBP1,948 million, and an 8 per cent
            increase in profit before tax.

-           Strong income growth, up 8 per cent, supported by a 46 per cent
            increase in cross-selling income and higher Corporate Markets and
            Business Banking volumes.

-           Widening of positive jaws.  Income growth exceeded cost growth of 4
            per cent.  Improving business momentum has led to an accelerated
            investment in people and systems to support new product
            capabilities.

-           Corporate asset quality remains strong, despite a rise of GBP120
            million in impairment losses, as a result of the high level of
            corporate releases and recoveries in 2005 not being repeated, and
            higher levels of impairment in the Asset Finance consumer
            portfolios.

-           Further good progress in building our Corporate Markets business,
            with a 19 per cent increase in Corporate Markets trading surplus.

-           Continued strong franchise growth in Business Banking, with 23 per
            cent growth in trading surplus, and 26 per cent growth in profit
            before tax. Lloyds TSB has retained its leading position as the bank
            of choice for start-up businesses.


Page 23 of 52



WHOLESALE AND INTERNATIONAL BANKING (continued)


In Wholesale and International Banking, the Group has continued to make
significant progress in its strategy to leverage the Group's strong corporate
and small business customer franchises and, in doing so, become the best UK
mid-market focused wholesale bank.  We have continued to develop new product
revenue streams, particularly in areas such as securitisation, structured credit
and credit loan trading which, coupled with a strong focus on targeted corporate
customer segments and Corporate Markets' cross-selling income growth remaining
strong, has supported good levels of overall income growth.  Revenue growth has
continued to exceed cost growth notwithstanding significant investment being
made in the enhancement of our product and distribution capabilities,
particularly in the Corporate Markets business.


Profit  before tax  increased  by GBP116  million,  or 8 per cent,  to  GBP1,640
million.  Good trading  momentum has continued  and has generated  strong income
growth of 8 per cent,  driven by Corporate Markets income growth of 15 per cent.
This  exceeded  cost  growth  of 4 per  cent,  leading  to a  reduction  in  the
cost:income  ratio to 53.8 per  cent,  from  56.0 per cent  last  year.  Trading
surplus increased by GBP236 million, or 14 per cent, to GBP1,948 million.


Net interest  income  increased  by GBP120  million,  or 5 per cent,  reflecting
higher income from strong growth in customer lending and customer deposits.  The
banking net interest margin reduced, largely reflecting the mix effect of slower
growth in the wider margin Asset Finance  business,  and lower Corporate Markets
and Business  Banking  margins  reflecting a higher  proportion  of finer margin
secured lending being written.  Other income increased by GBP199 million,  or 12
per cent,  as a result of good  levels of growth in  financial  markets  product
sales and credit structuring.  In addition,  fee and other transactional  income
throughout  the division  benefited  from volume  growth across a broad range of
customer activity. Costs were 4 per cent higher at GBP2,264 million,  reflecting
higher staff costs resulting from the continuing investment in people, processes
and systems, as the Group builds up its Corporate Markets product capability and
expertise.  This increased investment was mitigated by operational  efficiencies
achieved in Business Banking and Asset Finance.


As expected, the charge for impairment losses on loans and advances increased by
GBP120 million to GBP308 million, as a result of the high level of releases and
recoveries in Corporate Markets in 2005 which were not repeated in 2006, and a
higher level of consumer finance lending impairment in the Asset Finance
business.  Whilst overall corporate and small business asset quality remains
strong and the level of new corporate provisions remained at a low level in
2006, we continue to expect some normalisation in the impairment charge over the
next few years.


Page 24 of 52



WHOLESALE AND INTERNATIONAL BANKING (continued)


Corporate Markets


                                                                            2006               2005             Change
                                                                            GBPm               GBPm                  %
                                                                                                           
Net interest income                                                          891                777                 15
Other income                                                                 923                807                 14
Total income                                                               1,814              1,584                 15
Operating expenses                                                          (722)              (665)                (9)
Trading surplus                                                            1,092                919                 19
Net impairment credit on loans and advances                                   13                 57                (77)
Profit before tax                                                          1,105                976                 13



In Corporate  Markets,  profit before tax grew by 13 per cent,  driven by strong
levels  of  income  growth.  Income  increased  by 15  per  cent,  supported  by
significantly  higher levels of  cross-selling  income.  By building new product
revenue streams in areas such as structured  products and debt capital  markets,
and  targeting  and  developing  relationships  in selected  corporate  customer
segments,  Corporate Markets has created a broader,  more diversified  stream of
revenues to underpin  future  revenue  growth.  There has also been  significant
progress in the delivery of our  strategy  focused on improved  origination  and
distribution  capabilities  in  the  mid-sized  corporate  business.   Operating
expenses  increased  by  9  per  cent  to  GBP722  million,  reflecting  further
investment in people,  premises and systems to support ongoing  business growth.
The trading surplus  increased by 19 per cent. The net impairment credit reduced
to GBP13 million, reflecting the lower level of releases and recoveries.


Business Banking



                                                                            2006              2005            Change
                                                                            GBPm              GBPm                 %
                                                                                                        
Net interest income                                                          596               551                 8
Other income                                                                 255               248                 3
Total income                                                                 851               799                 7
Operating expenses                                                          (517)             (527)                2
Trading surplus                                                              334               272                23
Impairment losses on loans and advances                                      (87)              (76)              (14)
Profit before tax                                                            247               196                26



Profit  before tax in Business  Banking grew by GBP51  million,  or 26 per cent,
reflecting  strong growth in business volumes,  further  improvements in growing
the Business  Banking customer  franchise and progress in improving  operational
efficiency.  Strong  income  growth  combined  with tight cost control led to an
improvement of over 5 percentage points in the cost:income  ratio.  Costs remain
tightly  controlled  and were 2 per cent lower.  Business  Banking  continued to
develop and grow its customer franchise strongly,  with customer  recruitment of
some 118,000 during 2006,  reflecting a market-leading  position in the start-up
market.  Asset quality in the Business Banking  portfolios  remains strong.  The
impairment  charge  increased  by  GBP11  million  to  GBP87  million,   largely
reflecting a lower level of releases and recoveries than in 2005.


Page 25 of 52


WHOLESALE AND INTERNATIONAL BANKING (continued)


Asset Finance



                                                                            2006              2005            Change
                                                                            GBPm              GBPm                 %
                                                                                                         
Net interest income                                                          600               640                (6)
Other income                                                                 418               366                14
Total income                                                               1,018             1,006                 1
Operating expenses                                                          (583)             (582)                -
Trading surplus                                                              435               424                 3
Impairment losses on loans and advances                                     (245)             (205)              (20)
Profit before tax                                                            190               219               (13)



Profit before tax in Asset Finance  decreased by 13 per cent to GBP190  million,
reflecting higher levels of consumer finance impairment losses. Income increased
by GBP12  million,  or 1 per cent,  as good fee  income  growth in the  consumer
lending  business  and growth in the asset  backed  lending  and  contract  hire
businesses, was largely offset by the impact of the tightening of lending credit
criteria in the consumer lending  portfolios.  Lloyds TSB Commercial Finance has
continued to be a major presence in its market,  with a 19 per cent market share
measured by client numbers,  and the motor and leisure business  continues to be
the largest independent lender in the UK motor and leisure  point-of-sale market
with a share of 15 per cent.  Costs  were  held  flat,  leading  to a 3 per cent
growth in the trading surplus.  The impairment charge increased by GBP40 million
to GBP245  million,  reflecting  the ongoing  impact of higher  levels of retail
consumers experiencing repayment difficulties.



Page 26 of 52



CONSOLIDATED INCOME STATEMENT - STATUTORY



                                                                                             2006                2005
                                                                                             GBPm                GBPm
                                                                                                            
Interest and similar income                                                                14,316              12,589
Interest and similar expense                                                               (8,779)             (6,918)
Net interest income                                                                         5,537               5,671
Fee and commission income                                                                   3,116               2,990
Fee and commission expense                                                                   (846)               (842)
Net fee and commission income                                                               2,270               2,148
Net trading income                                                                          6,341               9,298
Insurance premium income                                                                    4,719               4,469
Other operating income                                                                        806               1,140
Other income                                                                               14,136              17,055
Total income                                                                               19,673              22,726
Insurance claims                                                                           (8,569)            (12,186)
Total income, net of insurance claims                                                      11,104              10,540
Operating expenses                                                                         (5,301)             (5,471)
Trading surplus                                                                             5,803               5,069
Impairment losses on loans and advances                                                    (1,555)             (1,299)
Profit on sale and closure of businesses                                                        -                  50
Profit before tax                                                                           4,248               3,820
Taxation                                                                                   (1,341)             (1,265)
Profit for the year                                                                         2,907               2,555


Profit attributable to minority interests                                                     104                  62
Profit attributable to equity shareholders                                                  2,803               2,493
Profit for the year                                                                         2,907               2,555


Basic earnings per share                                                                    49.9p               44.6p
Diluted earnings per share                                                                  49.5p               44.2p

Total dividend per share for the year*                                                      34.2p               34.2p
Total dividend for the year*                                                            GBP1,927m           GBP1,915m

*total dividend for the year represents the interim dividend paid in October 2006 and the final dividend which will
be paid and accounted for in May 2007.




Page 27 of 52



CONSOLIDATED BALANCE SHEET - STATUTORY


                                                                                   31 December             31 December
                                                                                          2006                    2005
Assets                                                                                    GBPm                    GBPm
                                                                                                             
Cash and balances at central banks                                                       1,898                   1,156
Items in course of collection from banks                                                 1,431                   1,310
Trading securities and other financial
assets at fair value through profit or loss                                             67,695                  60,374
Derivative financial instruments                                                         5,565                   5,878
Loans and advances to banks                                                             40,638                  31,655
Loans and advances to customers                                                        188,285                 174,944
Available-for-sale financial assets                                                     19,178                  14,940
Investment property                                                                      4,739                   4,260
Goodwill                                                                                 2,377                   2,373
Value of in-force business                                                               2,723                   2,922
Other intangible assets                                                                    138                      50
Tangible fixed assets                                                                    4,252                   4,291
Other assets                                                                             4,679                   5,601
Total assets                                                                           343,598                 309,754

Equity and liabilities
Deposits from banks                                                                     36,394                  31,527
Customer accounts                                                                      139,342                 131,070
Items in course of transmission to banks                                                   781                     658
Trading and other liabilities at fair value through profit or loss                       1,184                       -
Derivative financial instruments                                                         5,763                   6,396
Debt securities in issue                                                                54,118                  39,346
Liabilities arising from insurance contracts and
participating investment contracts                                                      41,445                  40,550
Liabilities arising from non-participating
investment contracts                                                                    24,370                  21,839
Unallocated surplus within insurance businesses                                            683                     518
Other liabilities                                                                       10,985                   9,843
Retirement benefit obligations                                                           2,462                   2,910
Current tax liabilities                                                                    817                     552
Deferred tax liabilities                                                                 1,416                   1,145
Other provisions                                                                           259                     368
Subordinated liabilities                                                                12,072                  12,402
Total liabilities                                                                      332,091                 299,124

Equity
Share capital                                                                            1,429                   1,420
Share premium account                                                                    1,266                   1,170
Other reserves                                                                             355                     383
Retained profits                                                                         8,105                   7,222
Shareholders' equity                                                                    11,155                  10,195
Minority interests                                                                         352                     435
Total equity                                                                            11,507                  10,630

Total equity and liabilities                                                           343,598                 309,754



Page 28 of 52



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - STATUTORY





                                       Attributable to equity shareholders
                                     Share capital         Other       Retained        Minority
                                       and premium      reserves        profits       interests           Total
                                              GBPm          GBPm           GBPm            GBPm            GBPm
                                                                                             
Balance at 1 January 2005                    2,564           371          6,554              81           9,570
Movement in available-for-sale                   -             8              -               -               8
financial assets, net of tax
Movement in cash flow hedges,                    -            11              -               -              11
net of tax
Currency translation differences                 -            (7)            24               -              17
Net income recognised directly in equity         -            12             24               -              36
Profit for the year                              -             -          2,493              62           2,555
Total recognised income for the year             -            12          2,517              62           2,591
Dividends                                        -             -         (1,914)            (37)         (1,951)
Purchase/sale of treasury shares                 -             -             18               -              18
Employee share option schemes:
-  value of employee services                    -             -             47               -              47
-  proceeds from shares issued                  26             -              -               -              26
Capital invested by minority                     -             -              -             329             329
shareholders
Balance at 31 December 2005                  2,590           383          7,222             435          10,630
Movement in available-for-sale                   -           (31)             -               -             (31)
financial assets, net of tax
Movement in cash flow hedges, net of tax         -             1              -               -               1
Currency translation differences                 -             2            (31)             (4)            (33)
Net income recognised directly in equity         -           (28)           (31)             (4)            (63)
Profit for the year                              -             -          2,803             104           2,907
Total recognised income for the year             -           (28)         2,772             100           2,844
Dividends                                        -             -         (1,919)            (32)         (1,951)
Purchase/sale of treasury shares                 -             -            (35)              -             (35)
Employee share option schemes:
-  value of employee services                    -             -             65               -              65
-  proceeds from shares issued                 105             -              -               -             105
Repayment of capital to minority                 -             -              -            (151)           (151)
shareholders
Balance at 31 December 2006                  2,695           355          8,105             352          11,507




Page 29 of 52



CONSOLIDATED CASH FLOW STATEMENT - STATUTORY



                                                                                     2006                        2005
                                                                                     GBPm                        GBPm
                                                                                                            
Profit before tax                                                                   4,248                       3,820

Adjustments for:

Change in operating assets                                                        (31,995)                    (17,158)

Change in operating liabilities                                                    33,069                      10,039

Non-cash and other items                                                            1,555                       4,364

Tax paid                                                                             (798)                       (708)

Net cash provided by operating activities                                           6,079                         357

Cash flows from investing activities
Purchase of available-for-sale financial assets                                   (23,448)                    (10,108)
Proceeds from sale and maturity of available-for-sale financial                    18,106                      10,266
assets
Purchase of fixed assets                                                           (1,724)                     (1,843)
Proceeds from sale of fixed assets                                                  1,257                       1,073
Acquisition of businesses, net of cash acquired                                       (20)                        (27)
Disposal of businesses, net of cash disposed                                          936                          (4)
Net cash used in investing activities                                              (4,893)                       (643)

Cash flows from financing activities
Dividends paid to equity shareholders                                              (1,919)                     (1,914)
Dividends paid to minority interests                                                  (32)                        (37)
Interest paid on subordinated liabilities                                            (713)                       (668)
Proceeds from issue of subordinated liabilities                                     1,116                       1,361
Proceeds from issue of ordinary shares                                                105                          26
Repayment of subordinated liabilities                                                (759)                       (232)
Capital element of finance lease rental payments                                        -                          (2)
Capital invested by minority shareholders                                               -                         329
Repayment of capital to minority shareholders                                        (151)                          -
Net cash used in financing activities                                              (2,353)                     (1,137)
Effects of exchange rate changes on cash and cash equivalents                        (148)                        (20)
Change in cash and cash equivalents                                                (1,315)                     (1,443)
Cash and cash equivalents at beginning of year                                     26,753                      28,196
Cash and cash equivalents at end of year                                           25,438                      26,753



Cash and cash equivalents comprise cash and balances at central banks (excluding
mandatory deposits) and amounts due from banks with a maturity of less than
three months.


Page 30 of 52


CONDENSED SEGMENTAL ANALYSIS - STATUTORY


Lloyds TSB Group is a leading UK-based financial services group, whose
businesses provide a wide range of banking and financial services in the UK and
in certain locations overseas.  The Group's activities are organised into three
segments: UK Retail Banking, Insurance and Investments and Wholesale and
International Banking.  Central group items includes the funding cost of certain
acquisitions less earnings on capital, central costs and accruals for payment to
the Lloyds TSB Foundations.


Services provided by UK Retail Banking encompass the provision of banking and
other financial services to personal customers, private banking, stockbroking
and mortgages.  Insurance and Investments offers life assurance, pensions and
savings products, general insurance and asset management services.  Wholesale
and International Banking provides banking and related services for major UK and
multinational companies, banks and financial institutions, and small and
medium-sized UK businesses.  It also provides asset finance to personal and
corporate customers, manages the Group's activities in financial markets and
provides banking and financial services overseas.


During 2006, the bases adopted for allocating income and costs between the
different segments were consistent with those used in 2005 and set out in the
2005 Annual Report and Accounts.



Year ended                        UK    General       Life,    Insurance     Wholesale      Central
31 December 2006              Retail  Insurance    pensions          and           and        group
                             Banking              and asset  Investments International       items*
                                                 management                    Banking                     Total
                                GBPm       GBPm        GBPm         GBPm          GBPm         GBPm         GBPm
                                                                                        
Interest and similar income    6,913         24         820          844         8,806       (2,247)      14,316
*
Interest and similar          (3,271)         -        (741)        (741)       (6,421)       1,654       (8,779)
expense*
Net interest income            3,642         24          79          103         2,385         (593)       5,537
Other income (net of fee
and commission expense)
                               1,621        594       9,893       10,487         1,827          201       14,136
Total income                   5,263        618       9,972       10,590         4,212         (392)      19,673
Insurance claims                   -       (200)     (8,369)      (8,569)            -            -       (8,569)
Total income, net of           5,263        418       1,603        2,021         4,212         (392)      11,104
insurance claims
Operating expenses            (2,476)      (157)       (481)        (638)       (2,264)          77       (5,301)
Trading surplus (deficit)      2,787        261       1,122        1,383         1,948         (315)       5,803
Impairment losses on loans    (1,238)         -           -            -          (308)          (9)      (1,555)
and advances
Profit (loss) before tax       1,549        261       1,122        1,383         1,640         (324)       4,248
External revenue               8,136      1,249      10,888       12,137         8,867          158       29,298
Inter-segment revenue*           698         19         199          218         2,276       (3,192)           -
Segment revenue                8,834      1,268      11,087       12,355        11,143       (3,034)      29,298

*Central group items on this and the following page includes inter-segment consolidation adjustments within
interest and similar income and within interest and similar expense as follows: interest and similar income GBP
(3,241) million (2005: GBP(2,975) million); interest and similar expense GBP3,241million (2005: GBP2,975 million).
There is no impact on net interest income.  Similarly, Central group items includes inter-segment revenue
adjustments of GBP(4,102) million (2005: GBP(3,951) million).




Page 31 of 52


CONDENSED SEGMENTAL ANALYSIS - STATUTORY (continued)



Year ended                        UK    General        Life,    Insurance     Wholesale      Central
31 December 2005              Retail  Insurance     pensions          and           and        group
                             Banking               and asset  Investments International       items*
                                                  management                    Banking                     Total
                                GBPm       GBPm         GBPm         GBPm          GBPm         GBPm         GBPm
                                                                                        
Interest and similar income    6,652         27          850          877         6,944       (1,884)      12,589
*
Interest and similar          (3,131)        (4)        (478)        (482)       (4,679)       1,374       (6,918)
expense*

Net interest income            3,521         23          372          395         2,265         (510)       5,671
Other income (net of fee
and commission expense)
                               1,605        571       13,288       13,859         1,628          (37)      17,055
Total income                   5,126        594       13,660       14,254         3,893         (547)      22,726
Insurance claims                   -       (197)     (11,989)     (12,186)            -            -      (12,186)
Total income, net of           5,126         397       1,671        2,068         3,893         (547)      10,540
insurance claims
Operating expenses            (2,697)      (160)        (434)        (594)       (2,181)           1       (5,471)
Trading surplus (deficit)      2,429        237        1,237        1,474         1,712         (546)       5,069
Impairment losses on loans    (1,111)         -            -            -          (188)           -       (1,299)
and advances
Profit (loss) on sale and         76          -            -            -            (6)         (20)          50
closure of businesses
Profit (loss) before tax       1,394        237        1,237        1,474         1,518         (566)       3,820
External revenue               7,833      1,272       14,127       15,399         7,283          (29)      30,486
Inter-segment revenue*           744         16          330          346         1,686       (2,776)           -
Segment revenue                8,577      1,288       14,457       15,745         8,969       (2,805)      30,486




Page 32 of 52





NOTES
                                                                                                      
                                                                                                           Page
1     Accounting policies, presentation and estimates                                                        34
2     Volatility                                                                                             35
3     Mortgage lending                                                                                       36
4     Group net interest income                                                                              37
5     Other income                                                                                           38
6     General insurance income                                                                               38
7     Operating expenses                                                                                     39
8     Number of employees (full-time equivalent)                                                             39
9     Impairment losses on loans and advances                                                                40
10    Retirement benefit obligations                                                                         41
11    Capital ratios                                                                                         42
12    Balance sheet information                                                                              43
13    Profit on sale and closure of businesses                                                               43
14    Economic profit                                                                                        44
15    Earnings per share                                                                                     44
16    Scottish Widows - realistic balance sheet information                                                  45
17    European Embedded Value reporting - results for year ended 31 December 2006                            46
18    Scottish Widows - weighted sales                                                                       50
19    Taxation                                                                                               50
20    Dividend                                                                                               51
21    Other information                                                                                      51




Page 33 of 52



1.       Accounting policies, presentation and estimates


The 2006 results have been prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union (EU).  Except as
noted below, the accounting policies adopted in the preparation of these results
are unchanged from those disclosed in the Group's consolidated financial
statements for the year ended 31 December 2005 copies of which can be found on
the Group's website at www.investorrelations.lloydstsb.com/ir/
company_reports_page.asp or are available on request from the Company
Secretary's Department, Lloyds TSB Group plc, 25 Gresham Street, London EC2V
7HN.


The following IFRS pronouncements relevant to the Group for the first time have
been adopted in preparing these results:


(i)       Amendment to IAS 19 Actuarial Gains and Losses, Group Plans and
Disclosures.  The Group has not changed its accounting policy for the
recognition of actuarial gains and losses as a result of this amendment; the
additional disclosures required will be provided in the Group's consolidated
financial statements for the year ended 31 December 2006.


(ii)      Amendment to IAS 39 Financial Instruments: Recognition and Measurement
- The Fair Value Option.  This amendment, which was effective from 1 January
2006, changed the criteria for financial assets to be designated at fair value
through profit or loss and permitted financial liabilities meeting certain
criteria to be designated at fair value for the first time.  The adoption of
these requirements had no effect upon the classification or valuation of those
financial assets that were designated at fair value through profit or loss prior
to 1 January 2006; at 31 December 2006, GBP1.2 billion of financial liabilities
had been designated at inception into this category during the year.  This
change has had no material effect upon the Group's income statement.


(iii)     Amendment to IAS 39 Financial Instruments: Recognition and Measurement
and IFRS 4 Insurance Contracts - Financial Guarantee Contracts.  Since 1 January
2006, all of the Group's financial guarantee contracts have been accounted for
as financial instruments.  This change has had no material effect upon the
Group's financial statements.


(iv)      IFRIC Interpretation 4 Determining Whether an Arrangement Contains a
Lease.  The Group has reviewed the terms of all contracts potentially affected
by this interpretation; its adoption has had no material effect upon the Group's
financial statements.


For 2006, the Group has also introduced supplementary financial reporting
relating to Scottish Widows Group using European Embedded Value ('EEV')
Principles as published by the Chief Financial Officers Forum ('CFO Forum') in
2004.  The Group has also aligned the accounting for insurance products which
are recognised on an embedded value basis under IFRS to a basis consistent with
relevant EEV Principles.  The impact of this change has been to reduce profit
before tax for the year ended 31 December 2006 by GBP18 million.



Page 34 of 52



2.       Volatility


Banking volatility

In accordance  with IFRS, it is the Group's policy to recognise all  derivatives
at fair value.  The banking  businesses  manage  their  interest  rate and other
market risks  primarily  through the use of  intra-Group  derivatives,  with the
resulting net positions managed centrally using external derivatives.  IFRS does
not,  however,  permit  the  intra-Group  derivatives  to  be  used  in a  hedge
relationship for reporting  purposes.  Although fair value accounting can have a
significant  impact on  reported  earnings,  it does not impact on the  business
fundamentals  or  cash  flows  of the  businesses.  The  Group  has,  therefore,
implemented  an  internal  pricing  arrangement  whereby  divisions  transfer to
Central group items the volatility associated with marking to market derivatives
held for risk  management  purposes  where,  as far as  possible,  the effect is
minimised by establishing IAS 39 compliant hedge accounting  relationships.  The
net result is separately disclosed as banking volatility.


During 2006,  profit before tax included  banking  volatility of GBP(3) million,
being a charge of GBP136  million to net interest  income and a credit of GBP133
million  to other  income,  (2005:  GBP(124)  million,  being a charge  of GBP79
million to net interest  income and a charge of GBP45 million to other  income).
The significant  reduction in this source of volatility  reflects the beneficial
effect of rising  interest rates which has had the result of changing the way in
which the gradual  unwind of the Group's fair value  hedging  relationships  has
impacted the income statement.


Insurance volatility

The Group's insurance businesses have liability products that are supported by
substantial holdings of investments, including equities, property and fixed
interest investments, all of which have a volatile fair value.  The liabilities
and supporting investments do not move exactly in line as the fair value of
investments changes, yet IFRS requires that the changes in both the value of the
liabilities and investments be reflected within the income statement.  As these
investments are substantial and movements in their fair value can have a
significant impact on the profitability of the Insurance and Investments
division, management believes that it is appropriate to disclose the division's
results on the basis of an expected return in addition to the actual return.
The difference between the actual return on these investments and the expected
return based upon economic assumptions made at the beginning of the period is
included within insurance volatility.


Changes in market variables also affect the realistic valuation of the
guarantees and options embedded within products written in the Scottish Widows
With Profit Fund, the value of the in-force business and the value of
shareholders' funds.  Fluctuations in these values caused by changes in market
variables are also included within insurance volatility.


The expected investment returns used to determine the normalised profit of the
business, which are based on prevailing market rates and published research into
historic investment return differentials are set out below:


                                                                            2007              2006              2005
                                                                               %                 %                 %
                                                                                                        
Gilt yields (gross)                                                         4.62              4.12              4.57
Equity returns (gross)                                                      7.62              6.72              7.17
Dividend yield                                                              3.00              3.00              3.00
Property return (gross)                                                     7.62              6.72              7.17
Corporate bonds (gross)                                                     5.22              4.72              5.17



Page 35 of 52



2.       Volatility (continued)


During 2006, profit before tax included positive  insurance  volatility of GBP84
million,  being a credit of GBP2 million to net interest  income and a credit of
GBP82  million to other income  (2005:  GBP438  million,  being a credit of GBP6
million to net interest  income and a credit of GBP432 million to other income).
Returns in 2005  benefited  from rising  stock  markets and rising gilt  values.
Although  equity values  continued to rise in 2006, this was less marked than in
2005 and the  effect  was  partly  offset by  falling  gilt  values and a charge
following the change in the economic  assumptions used to calculate the value of
in-force business at 31 December 2006.


Policyholder interests volatility

As a result of the requirement contained in IFRS to consolidate the Group's life
and pensions businesses on a line by line basis, the Group's income statement
includes amounts attributable to policyholders which affect profit before tax;
the most significant of these items is policyholder tax.



Under IFRS, tax on policyholder investment returns is required to be included in
the Group's tax charge rather than being offset against the related  income,  as
it is in actual  distributions made to policyholders.  The impact is, therefore,
to either increase or decrease profit before tax with a corresponding  change in
the tax charge. Other items classified within policyholder  interests volatility
include the effects of investment  vehicles which are only majority owned by the
long-term assurance funds. In the case of these vehicles, the Group's profit for
the year includes the minorities'  share of the profits earned. As these amounts
do  not  accrue  to  the   equity   holders,   management   believes  a  clearer
representation  of the  underlying  performance of the Group's life and pensions
businesses is presented by excluding policyholder interests volatility.


During  2006,  profit  before  tax  included  positive  policyholder   interests
volatility  of GBP326  million,  being a charge of GBP33 million to net interest
income and a credit of GBP359  million to other income  (2005:  GBP311  million,
being a credit to other income). The increase reflects an improved return from a
property partnership majority owned by the policyholders, which more than offset
a reduction in the  policyholder tax charge as a result of a fall in the capital
values of gilts and bonds and a smaller rise in equity markets.



3.       Mortgage lending


                                                                                    2006                2005
                                                                                                   
Gross new mortgage lending                                                     GBP27.6bn           GBP26.0bn
Market share of gross new mortgage lending                                          8.0%                9.0%
Redemptions                                                                    GBP20.7bn           GBP17.7bn
Market share of redemptions                                                         8.8%                9.0%
Net new mortgage lending                                                        GBP6.9bn            GBP8.3bn
Market share of net new mortgage lending                                            6.3%                9.1%
Mortgages outstanding (period-end)*                                            GBP95.3bn           GBP88.4bn
Market share of mortgages outstanding                                               8.8%                9.1%

*excluding the effect of IFRS related adjustments in order to conform with industry statistics.



In Cheltenham & Gloucester, the average indexed loan-to-value ratio on the
mortgage portfolio was 44 per cent (31 December 2005: 43 per cent), and the
average loan-to-value ratio for new mortgages and further advances written
during 2006 was 64 per cent (2005: 64 per cent).  At 31 December 2006, only 0.6
per cent of balances had an indexed loan-to-value ratio in excess of 95 per cent
(31 December 2005: 0.6 per cent).


Page 36 of 52


4.       Group net interest income


                                                                                            2006                  2005
                                                                                            GBPm                  GBPm
                                                                                                            
Banking margin - new basis
Net interest income                                                                        5,122                 4,904
Average interest-earning assets, excluding reverse repos                                 170,743               157,455
Net interest margin                                                                        3.00%                 3.11%

Banking margin - previous basis

Net interest income                                                                        5,662                 5,398
Average interest-earning assets, excluding reverse repos                                 217,076               194,264
Net interest margin                                                                        2.61%                 2.78%

Statutory basis
Net interest income                                                                        5,537                 5,671
Average interest-earning assets, excluding reverse repos                                 226,990               201,813
Net interest margin                                                                        2.44%                 2.81%


The Group's  net  interest  income  includes  certain  amounts  attributable  to
policyholders,  in addition to the interest earnings on shareholders' funds held
in the Group's insurance businesses.  In addition,  the introduction of IFRS has
significantly  affected  the  Group  net  interest  margin  with  regard  to the
accounting  treatment of a number of Financial  Markets,  Structured Finance and
other products, principally those where funding costs are treated as an interest
expense and related  revenues are  recognised  within other income.  In order to
enhance  comparability  in the Group's  banking net interest  margin these items
have been excluded from the previous  reporting  basis in  determining  both net
interest income and average interest-earning assets on the new basis.


A reconciliation of banking net interest income to Group net interest income
follows:


                                                                                            2006                  2005
                                                                                            GBPm                  GBPm
                                                                                                             
Banking net interest income - new basis                                                    5,122                 4,904
Products and Markets, and other                                                              540                   494
Banking net interest income - previous basis                                               5,662                 5,398
Volatility                                                                                  (167)                  (73)
Insurance grossing adjustment                                                                 78                   310
Other                                                                                        (36)                   36
Group net interest income                                                                  5,537                 5,671


Page 37 of 52


5.       Other income
                                                                                            2006                  2005
                                                                                            GBPm                  GBPm
Excluding volatility
Fees and commissions receivable:
  UK current account fees                                                                    652                   593
  Other UK fees and commissions                                                            1,210                 1,041
  Insurance broking                                                                          629                   681
  Card services                                                                              493                   545
  International fees and commissions                                                         132                   130
                                                                                           3,116                 2,990
Fees and commissions payable                                                                (846)                 (842)
Net fees and commissions income                                                            2,270                 2,148
Net trading income                                                                         5,848                 8,859
Insurance premium income                                                                   4,719                 4,469
Other operating income                                                                       725                   881
Total other income*                                                                       13,562                16,357
Insurance claims                                                                          (8,569)              (12,186)
Total other income, net of insurance claims*                                               4,993                 4,171
Volatility
-  Banking                                                                                   133                   (45)
-  Insurance                                                                                  82                   432
-  Policyholder interests                                                                    359                   311
Total other income, net of insurance claims                                                5,567                 4,869

*excluding volatility.  For statutory reporting purposes, volatility totalling GBP574 million in 2006 (2005: GBP698
million) is included in total other income; comprising net trading income of GBP493 million (2005: GBP439 million) and
other operating income of GBP81 million (2005: GBP259 million).



6.       General insurance income
                                                                                      2006                 2005
                                                                                      GBPm                 GBPm

Premium income from underwriting
Creditor                                                                               180                  127
Home                                                                                   424                  441
Health                                                                                  13                   16
Reinsurance premiums                                                                   (17)                 (22)
                                                                                       600                  562
Commissions from insurance broking
Creditor                                                                               377                  396
Home                                                                                    47                   49
Health                                                                                  13                   15
Other                                                                                  192                  221
                                                                                       629                  681


Page 38 of 52


7.       Operating expenses
                                                                                    2006                    2005
                                                                                    GBPm                    GBPm

Administrative expenses:

Staff:
  Salaries                                                                         2,117                   2,068
  National insurance                                                                 161                     154
  Pensions
  -  Before pension schemes related credit                                           293                     308
  -  Pension schemes related credit                                                 (128)                      -
                                                                                     165                     308
  Other staff costs                                                                  298                     325
                                                                                   2,741                   2,855
Premises and equipment:
  Rent and rates                                                                     310                     305
  Hire of equipment                                                                   15                      13
  Repairs and maintenance                                                            165                     136
  Other                                                                              149                     152
                                                                                     639                     606
Other expenses:
  Communications and external data processing                                        499                     467
  Advertising and promotion                                                          184                     207
  Professional fees                                                                  231                     216
  Provisions for customer redress                                                      -                     150
  Other                                                                              388                     325
                                                                                   1,302                   1,365
Administrative expenses                                                            4,682                   4,826
Depreciation and amortisation                                                        619                     639
Impairment of goodwill                                                                 -                       6
Total operating expenses                                                           5,301                   5,471

Cost:income ratio - statutory basis*                                               47.7%                   51.9%

Cost:income ratio - excluding volatility, provisions for customer                  50.8%                   52.8%
redress, the strengthening of reserves for mortality and pension
schemes related credit*
*total operating expenses divided by total income, net of insurance claims.



8.       Number of employees (full-time equivalent)
                                                                                    2006                    2005

UK Retail Banking                                                                 30,903                  33,253
Insurance and Investments                                                          5,837                   6,131
Wholesale and International Banking                                               19,260                  19,716
Other, largely IT and Operations                                                   9,499                  10,678
                                                                                  65,499                  69,778
Agency staff (FTE)                                                                (2,869)                 (2,981)
Total number of employees (full-time equivalent)                                  62,630                  66,797


Page 39 of 52


9.       Impairment losses on loans and advances
                                                                                            2006                  2005
                                                                                            GBPm                  GBPm
Impairment losses on loans and advances (see below)                                        1,560                 1,302
Other credit risk provisions                                                                  (5)                   (3)
                                                                                           1,555                 1,299
Impairment losses on loans and advances
UK Retail Banking
  Personal loans/overdrafts                                                                  740                   656
  Credit cards                                                                               490                   396
  Mortgages                                                                                    8                    13
                                                                                           1,238                 1,065

Wholesale and International Banking                                                          313                   191

Central group items                                                                            9                    46

Total charge                                                                               1,560                 1,302


Charge as % of average lending:                                                                %                     %
  Personal loans/overdrafts                                                                 5.85                  5.33
  Credit cards                                                                              6.99                  5.80
  Mortgages                                                                                 0.01                  0.02
UK Retail Banking                                                                           1.18                  1.09
Wholesale and International Banking                                                         0.39                  0.28
Total charge                                                                                0.83                  0.76


In the analysis of impairment losses set out above, the losses attributable to
the Goldfish business, which was sold in December 2005, have been transferred
into Central group items in order to allow a meaningful comparison of the
results of UK Retail Banking.


Page 40 of 52


10.     Retirement benefit obligations


The amounts recognised in the balance sheet are as follows:
                                                                               31 December          31 December
                                                                                      2006                 2005
                                                                                      GBPm                 GBPm

Defined benefit pension schemes
Present value of scheme liabilities                                                 17,378               17,320
Fair value of scheme assets                                                        (15,279)             (14,026)
Net defined benefit scheme deficit                                                   2,099                3,294
Unrecognised actuarial gains (losses)                                                  263                 (485)
Net recognised defined benefit scheme deficit                                        2,362                2,809
Other post-retirement benefit schemes                                                  100                  101
Net recognised liability                                                             2,462                2,910
Deferred tax                                                                          (739)                (873)
Recognised liability after tax                                                       1,723                2,037



The Group's defined  benefit pension  schemes' gross deficit at 31 December 2006
improved by GBP1,195  million to GBP2,099  million,  comprising  net  recognised
liabilities of GBP2,362 million partly offset by unrecognised actuarial gains of
GBP263 million.  This improvement largely reflects continued strong returns from
the schemes' assets,  Group  contributions to the schemes and an increase in the
real discount rate used to value the schemes'  liabilities,  which  exceeded the
cost  of  accruing  benefits.  The  decision  to  stop  augmenting  the  pension
entitlement of employees taking early retirement  reduced the pension deficit by
GBP129 million.


In 2006,  the Group  reached  agreement  with the  trustees  of the  Group's two
principal  pension schemes to fund the schemes'  actuarial  funding  deficits of
approximately  GBP1.5  billion,  as at 30 June 2005, over a period of ten years.
The  Group  also  indicated  that it  expected  to  continue  making  additional
voluntary contributions to the schemes.  Further interim actuarial valuations of
the schemes were  carried out on behalf of the  schemes'  Trustees as at 30 June
2006;  these  valuations  showed a  significant  reduction  in the  deficits  to
approximately GBP0.3 billion.


The Group's contributions to its pension schemes are as follows:


                                                                                      2006                 2005
                                                                                      GBPm                 GBPm
                                                                                                      
Normal service contributions                                                           242                  195
Past service costs                                                                      32                   15
Agreed deficit contributions                                                           195                   65
Additional voluntary contributions                                                      81                  144
                                                                                       550                  419


Page 41 of 52


11.     Capital ratios

                                                                            31 December         31 December
                                                                                   2006                2005
Capital                                                                            GBPm                GBPm


Tier 1

Share capital and reserves                                                       11,155              10,195
Less: AFS revaluation reserve and cash flow hedging reserve                         (12)                (40)

Regulatory post-retirement benefit adjustments                                    1,041               1,372

Core tier 1 capital instruments                                                   1,610                 577

Innovative tier 1 capital instruments                                             1,372               1,905

Less: restriction in amount eligible                                                  -                (183)

Goodwill                                                                         (2,377)             (2,373)

Other items                                                                          39                  25

Total tier 1 capital                                                             12,828              11,478

Tier 2

Undated loan capital                                                              4,390               4,551

Dated loan capital                                                                3,624               3,903

Innovative capital restricted from tier 1                                             -                 183

Collectively assessed provisions                                                  1,951               1,782

AFS revaluation reserve in respect of equities                                        -                  28

Total tier 2 capital                                                              9,965              10,447

                                                                                 22,793              21,925

Supervisory deductions

Life and pensions businesses                                                     (5,368)             (5,478)

Other deductions                                                                   (790)               (682)

Total supervisory deductions                                                     (6,158)             (6,160)

Total capital                                                                    16,635              15,765


Risk-weighted assets                                                              GBPbn               GBPbn
UK Retail Banking                                                                  59.1                60.4
Insurance and Investments                                                           3.1                 2.6
Wholesale and International Banking                                                91.8                80.1
Central group items                                                                 2.0                 1.8
Total risk-weighted assets                                                        156.0               144.9


Risk asset ratios

Total capital                                                                     10.7%               10.9%
Tier 1                                                                             8.2%                7.9%

                                                                                   2006                2005
Post-tax return on average risk-weighted assets                                   1.89%               1.81%
Post-tax return on average risk-weighted assets*                                  1.72%               1.77%

*excluding volatility, pension schemes related credit and, in 2005, profit on sale and closure of
businesses, customer redress provisions and strengthening of reserves for mortality.


Page 42 of 52


12.     Balance sheet information
                                                                              31 December          31 December
                                                                                     2006                 2005
                                                                                     GBPm                 GBPm

Deposits - customer accounts
Sterling:
Non-interest bearing current accounts                                               3,739                3,604
Interest bearing current accounts                                                  40,906               37,976
Savings and investment accounts                                                    64,380               60,522
Other customer deposits                                                            19,134               16,809
Total sterling                                                                    128,159              118,911
Currency                                                                           11,183               12,159
Total deposits - customer accounts                                                139,342              131,070


Loans and advances to customers

Domestic:
Agriculture, forestry and fishing                                                   2,905                2,451
Energy and water supply                                                             2,024                1,592
Manufacturing                                                                       7,513                7,923
Construction                                                                        2,332                2,222
Transport, distribution and hotels                                                 10,490                9,465
Postal and communications                                                             831                  546
Property companies                                                                 12,896                8,713
Financial, business and other services                                             22,999               21,261
Personal  : mortgages                                                              95,601               88,895
          : other                                                                  23,025               23,280
Lease financing                                                                     4,802                5,815
Hire purchase                                                                       5,060                4,853
                                                                                  190,478              177,016
Allowance for impairment losses on loans and advances                              (2,193)              (2,072)
Total loans and advances to customers                                             188,285              174,944



Total loans and advances to customers in our international businesses totalled
GBP5,589 million (2005: GBP4,819 million).


13.     Profit on sale and closure of businesses


In December 2005, the Group announced the disposal of its Goldfish credit card
business and this, together with additional costs incurred in relation to
business closures or previous disposals, led to a net profit of GBP50 million
being recognised in the income statement for the year ended 31 December 2005.



Page 43 of 52


14.     Economic profit
                                                                                            2006                  2005
                                                                                            GBPm                  GBPm

Statutory basis

Average shareholders' equity                                                              10,531                 9,747

Profit attributable to equity shareholders                                                 2,803                 2,493

Less: notional charge                                                                       (948)                 (877)

Economic profit                                                                            1,855                 1,616


Excluding volatility, profit on sale and closure of businesses, customer
redress provisions, strengthening of reserves for mortality and pension
schemes related credit
Average shareholders' equity                                                              10,490                 9,716



Profit attributable to equity shareholders                                                 2,636                 2,475

Less: notional charge                                                                       (944)                 (874)

Economic profit                                                                            1,692                 1,601


Economic profit represents the difference between the earnings on the equity
invested in a business and the cost of the equity.  The notional charge has been
calculated by multiplying average shareholders' equity by the cost of equity
used by the Group of 9 per cent (2005: 9 per cent).



15.     Earnings per share


Statutory basis                                                                       2006                 2005

Basic
Profit attributable to equity shareholders                                       GBP2,803m            GBP2,493m
Weighted average number of ordinary shares in issue                                 5,616m               5,595m
Earnings per share                                                                   49.9p                44.6p


Fully diluted

Profit attributable to equity shareholders                                       GBP2,803m            GBP2,493m
Weighted average number of ordinary shares in issue                                 5,667m               5,639m
Earnings per share                                                                   49.5p                44.2p


Excluding volatility, profit on sale and closure of businesses,
customer redress provisions, strengthening of reserves for mortality
and pension schemes related credit
Profit attributable to equity shareholders                                       GBP2,636m            GBP2,475m
Weighted average number of ordinary shares in issue                                 5,616m               5,595m
Earnings per share                                                                   46.9p                44.2p



Page 44 of 52


16.     Scottish Widows - realistic balance sheet information


Financial Services Authority (FSA) returns for large with-profits companies now
include realistic balance sheet information.  The information included in FSA
returns concentrates on the position of the With Profits Fund.  However, under
the Scottish Widows demutualisation structure, which was court approved, the
fund is underpinned by certain assets outside the With Profits Fund and it is
more appropriate to consider the long-term fund position as a whole to measure
the realistic capital position of Scottish Widows. The estimated position at 31
December 2006, allowing for a proposed transfer of GBP750 million from the
Long-Term Fund to the Shareholder Fund, is shown below, together with the actual
position at 31 December 2005.


31 December 2006 (estimated)                                                  With Profit            Long Term
                                                                                     Fund                 Fund
                                                                                    GBPbn                GBPbn

Available assets, including support account                                          19.3                 22.3
Realistic value of liabilities                                                      (18.2)               (18.1)
Working capital for fund                                                              1.1                  4.2

Working capital ratio                                                                5.8%                18.9%

Risk capital margin cover                                                       5.3 times           17.4 times



31 December 2005                                                              With Profit            Long Term
                                                                                     Fund                 Fund
                                                                                    GBPbn                GBPbn

Available assets, including support account                                          20.4                 23.2
Realistic value of liabilities                                                      (19.3)               (19.1)
Working capital for fund                                                              1.1                  4.1

Working capital ratio                                                                5.5%                17.7%

Risk capital margin cover                                                       3.6 times           11.9 times


Page 45 of 52


17.     European Embedded Value reporting - results for year ended 31 December
2006


This section provides further details of the Scottish Widows' EEV financial
information.


Composition of EEV balance sheet
                                                                                     2006                 2005
                                                                                     GBPm                 GBPm

Value of in-force business (certainty                                               3,220                3,466
equivalent)
Value of financial options and guarantees                                             (56)                (193)
Cost of capital                                                                      (248)                (262)
Non-market risk                                                                       (75)                 (70)
Total value of in-force business                                                    2,841                2,941
Shareholders' net assets                                                            3,572                3,445
Total EEV of covered business                                                       6,413                6,386



Reconciliation of opening EEV balance sheet to closing EEV balance sheet on
covered business


                                                                                 Value of
                                                       Shareholders'             in-force
                                                          net assets             business                Total
                                                                GBPm                 GBPm                 GBPm
                                                                                                 
As at 1 January 2005                                           3,880                2,581                6,461
Total profit after tax                                           565                  360                  925
Dividends                                                     (1,000)                   -               (1,000)
As at 31 December 2005                                         3,445                2,941                6,386
Total profit after tax                                           873                 (100)                 773
Dividends                                                       (746)                   -                 (746)
As at 31 December 2006                                         3,572                2,841                6,413

During 2006, Scottish Widows adopted the FSA's Policy Statement  06/14 which
amends the reserving requirements for non with-profits business written by life
companies.  This has increased shareholders' net assets and reduced the value of
in-force business by approximately GBP400 million.


Analysis of shareholders' net assets on an EEV basis on covered business
                                                            Required                 Free        Shareholders'
                                                             capital              surplus           net assets
                                                                GBPm                 GBPm                 GBPm

As at 1 January 2005                                           3,058                  822                3,880
Total profit after tax                                          (105)                 670                  565
Debt issued                                                     (560)                 560                    -
Dividends                                                          -               (1,000)              (1,000)
As at 31 December 2005                                         2,393                1,052                3,445
Total profit after tax                                          (186)               1,059                  873
Dividends                                                          -                 (746)                (746)
As at 31 December 2006                                         2,207                1,365                3,572



Page 46 of 52


17.     European Embedded Value reporting - results for year ended 31 December
2006 (continued)


2006 summary income statement on an EEV basis


                                                                                    2006                 2005
                                                                                    GBPm                 GBPm
                                                                                                    
New business profit                                                                  346                  254
Existing business profit
- Expected return                                                                    403                  390
- Experience variances                                                                69                   12
- Assumption changes                                                                (133)                (147)
Expected return on shareholders' net assets                                          167                  218
Profit before tax, excluding volatility and other items                              852                  727
Volatility                                                                           176                  584
Strengthening of annuitant mortality reserves                                          -                 (162)
Other items*                                                                          76                  172
Total profit before tax                                                            1,104                1,321
Attributed shareholder tax                                                          (331)                (396)
Total profit after tax                                                               773                  925



*other items represent amounts not considered attributable to the underlying
performance of the business.  The figure in 2006 represents the benefits of the
FSA's Policy Statement 06/14 and an intra-Group transfer of a portfolio of
OEICs.  The figure in 2005 represents a similar intra-Group transfer of OEICs,
the capitalisation impact of a lower cost of capital following debt issuance,
and an increase in the value of deferred tax assets.


Page 47 of 52


17.     European Embedded Value reporting - results for year to 31 December 2006
(continued)


Economic assumptions

A bottom up approach is used to determine the economic assumptions for valuing
the business in order to determine a market consistent valuation.


The risk-free rate assumed in valuing in-force business is 10 basis points over
the 15 year gilt yield.  In valuing financial options and guarantees the
risk-free rate is derived from gilt yields plus 10 basis points, in line with
Scottish Widows' FSA realistic balance sheet assumptions.  The table below shows
the range of resulting yields and other key assumptions.



                                                                               31 December          31 December
                                                                                      2006                 2005
                                                                                         %                    %
                                                                                                      
 isk-free rate (value of in-force)                                                    4.72                 4.22
Risk-free rate (financial options and guarantees)                             3.91 to 5.41           3.9 to 4.3
Retail price inflation                                                                3.23                 2.89
Expense inflation                                                                     4.13                 3.79


Non-market risk

An allowance for non-market risk is made through the choice of best estimate
assumptions based upon experience, which generally will give the mean expected
financial outcome for shareholders and hence no further allowance for non-market
risk is required.  However, in the case of operational risk and the with-profits
fund these are asymmetric in the range of potential outcomes for which an
explicit allowance is made.


Non-economic assumptions

Future mortality, morbidity, lapse and paid-up rate assumptions are reviewed
each year and are based on an analysis of past experience and on management's
view of future experience.  These assumptions are intended to represent a best
estimate of future experience as at 31 December 2006.


For OEIC business, the lapse assumption is based on experience which has been
collected over a 20 month period.  To recognise that this is a shorter period
than that normally available for life and pensions business, and that this
period has coincided with favourable investment conditions, management have used
a best estimate of the long-term lapse assumption which is higher than indicated
by this 20 month experience.  In management's view, the approach and lapse
assumption are both reasonable.


Page 48 of 52


17.     European Embedded Value reporting - results for year to 31 December 2006
(continued)


Sensitivity analysis

The table below shows the sensitivity of the EEV and the new business profit
before tax to movements in some of the key assumptions. The impact of a change
in the assumption has only been shown in one direction. The impact can be
assumed to be reasonably symmetrical.


                                                                                                 Impact on new
                                                                                     Impact    business profit
                                                                                     on EEV         before tax
                                                                                       GBPm               GBPm
                                                                                                     
2006 EEV/new business profit before tax                                               6,413                346

(1)    100 basis points reduction in risk-free rates                                    237                 10
(2)    10% reduction in market values of equity and property assets                    (228)               n/a
(3)    10% reduction in expenses                                                         82                 35
(4)    10% reduction in lapses                                                           95                 21
(5)    5% reduction in annuitant mortality                                              (88)                (5)
(6)    5% reduction in mortality and morbidity (excluding annuitants)                    28                  3
(7)    100 basis points increase in equity and property returns                         nil                nil




(1)   In this sensitivity the impact takes into account the change in the value
of in-force business, financial options and guarantee costs, statutory reserves
and asset values.

(2)   The reduction in market values is assumed to have no corresponding change
in dividend or rental yields. The impact on EEV of GBP(228) million comprises a
GBP177 million reduction in the value of in-force business and a GBP51 million
reduction in the shareholders' net assets.

(3)   This sensitivity shows the impact of reducing new business and maintenance
expenses to 90 per cent of the expected rate.

(4)   This sensitivity shows the impact of reducing lapse and surrender rates to
90 per cent of the expected rate.

(5)   This sensitivity shows the impact on our annuity and deferred annuity
business of reducing mortality rates to 95 per cent of the expected rate.

(6)   This sensitivity shows the impact of reducing mortality rates on
non-annuity business to 95 per cent of the expected rate.

(7)   Under a market consistent valuation, changes in assumed equity and
property returns have no impact on the EEV.


In scenarios (3) to (6) assumptions have been flexed on the basis used to
calculate the value of in-force business and the realistic and the statutory
reserving bases.  A change in risk discount rates is not relevant as the risk
discount rate is not an input to a market consistent valuation.


Page 49 of 52


18.     Scottish Widows - weighted sales


                                                                            2006              2005            Change
Weighted sales (regular + 1/10 single)                                      GBPm              GBPm                 %
                                                                                                        
Life and pensions:
Savings and investments                                                      128               144               (11)
Protection                                                                    49                57               (14)
Individual pensions                                                          270               271                 -
Corporate and other pensions                                                 322               214                50
Retirement income                                                             98                68                44
Managed fund business                                                         35                50               (30)

Life and pensions                                                            902               804                12

OEICs                                                                        290               148                96
Life, pensions and OEICs                                                   1,192               952                25


Bancassurance                                                                403               274                47
Independent financial advisers                                               679               562                21
Direct                                                                        75                66                14
Managed fund business                                                         35                50               (30)

Life, pensions and OEICs                                                   1,192               952                25

New business margin (life and pensions)                                    31.8%             28.7%




19.     Taxation


Under IFRS the Group is required to include in income tax expense the tax
attributable to UK life insurance policyholder earnings and its interests in
Open-ended Investment Companies (OEICs).


The effective tax rate of the Group, excluding the gross policyholder and OEIC
interests from profit before tax and the tax charge, was 28.0 per cent (2005:
27.0 per cent) compared to the standard UK corporation tax rate of 30 per cent.


The effective tax rate including policyholder and OEIC interests was 31.6 per
cent, compared to 33.1 per cent in 2005.


A reconciliation of the charge that would result from applying the standard UK
corporation tax rate to profit before tax to the tax charge, including
policyholder and OEIC interests, is given below:



                                                                                      2006                 2005
                                                                                      GBPm                 GBPm
                                                                                                      
Profit before tax                                                                    4,248                3,820
Tax charge thereon at UK corporation tax rate of 30%                                 1,274                1,146
Factors affecting charge:
Disallowed and non-taxable items                                                        (8)                 (47)
Overseas tax rate differences                                                           (2)                  (1)
Net tax effect of disposals and unrealised gains                                       (78)                 (59)
Policyholder and OEIC interests                                                        139                  223
Other items                                                                             16                    3
Tax charge                                                                           1,341                1,265



Page 50 of 52


20.     Dividend


A final dividend for 2006 of 23.5p (2005: 23.5p) will be paid on 2 May 2007,
making a total for the year of 34.2p (2005: 34.2p).


Shareholders who have already joined the dividend reinvestment plan will
automatically receive shares instead of the cash dividend.  Key dates for the
payment of the dividend are:



                                                                                                            
Shares quoted ex-dividend                                                                                  7 March 2007
Record date                                                                                                9 March 2007
Final date for joining or leaving the dividend reinvestment plan                                           4 April 2007
Final dividend paid                                                                                          2 May 2007
Annual general meeting                                                                                       9 May 2007




21.     Other information


The financial information included in this news release does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 December 2006 were approved by the
directors on 22 February 2007 and will be delivered to the Registrar of
Companies following publication on 31 March 2007.  The auditors' report on these
accounts was unqualified and did not include a statement under sections 237(2)
(accounting records or returns inadequate or accounts not agreeing with records
and returns) or 237(3) (failure to obtain necessary information and
explanations) of the Companies Act 1985.



Page 51 of 52




contacts


                    For further information please contact:-





                                 Michael Oliver

                         Director of Investor Relations

                              Lloyds TSB Group plc

                                 020 7356 2167

                    Email: michael.oliver@ltsb-finance.co.uk





                                 Sarah Pollard

                       Senior Manager, Investor Relations

                              Lloyds TSB Group plc

                                 020 7356 1571

                    Email: sarah.pollard@ltsb-finance.co.uk





                                   Mary Walsh

                        Director of Corporate Relations

                              Lloyds TSB Group plc

                                 020 7356 2121

                       Email: mary.walsh@lloydstsb.co.uk





Copies of this news release may be obtained from Investor Relations, Lloyds TSB
Group plc, 25 Gresham Street, London EC2V 7HN.  The full news release can also
be found on the Group's website - www.lloydstsb.com.


A copy of the Group's corporate responsibility report may be obtained by writing
to Corporate Responsibility, Lloyds TSB Group plc, 25 Gresham Street, London
EC2V 7HN.  This information together with the Group's code of business conduct
is also available on the Group's website.


Registered office:  Lloyds TSB Group plc, Henry Duncan House, 120 George Street,
Edinburgh, EH2 4LH.  Registered in Scotland no. 95000.


Page 52 of 52



                                   Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              LLOYDS TSB GROUP plc
                                  (Registrant)



                                    By:       M D Oliver

                                    Name:     M D Oliver

                                    Title:    Director of Investor Relations



Date:   23 February 2007