BRITAIN'S largest retail financial services company, Lloyds TSB, reported its first set of annual results yesterday, posting higher profit offset by a larger than expected £425 million sterling restructuring charge.

Lloyds TSB chief executive Sir Brian Pitman promised this restructuring cost would be nonrecurring and that rapid progress on cost savings would be made in the next six months.

He estimated that last year's merger between Lloyds Bank and TSB Group, which formed the London share market's eighth biggest company with a value of around £17 billion, would produce cost savings of some £350 million a year from 1999.

But Sir Brian said Lloyds TSB shareholders would not have to wait until 1999 before they saw the benefits of the merger.

Lloyds TSB made a pre tax profit of £2.08 billion in 1995, excluding the restructuring charge. This compared to an estimated £2.17 billion in 1994 if Lloyds and TSB had been merged then.

Sir Brian said some of the £425 million restructuring costs would be used on scrapping computer systems which are being rationalised and on combining specialist departments such as clearing. But he insisted that relatively little of the money would be spent on reducing staff numbers, which Lloyds TSB said would fall through voluntary means and natural turnover.

As ever, Lloyds stressed the quality of its earnings, pointing out it gets only 2.8 per cent from volatile dealing operations.

The market was unexcited by the results, however, which fell within expectations. The shares were down 7p at 340.5p.

Mr Michael Lever, banking analyst at James Capel, said he would probably be raising his 996 pre tax profit forecast slightly to between £2.2 and £2.4 billion from around £2.18 billion currently.