Lloyds TSB has reported a six per cent rise in annual profits despite global liquidity problems in the latter half of 2007.

The UK bank said pre-tax profits, including the impact of the credit crunch, were up to £3.9 billion.

When the £280 million “market dislocation” is excluded however, Lloyds TSB claims its profits before tax rose 13 per cent to £4.2 billion.

“I am delighted to report that the group has continued to deliver a strong trading performance, notwithstanding the significant recent turbulence in global financial markets,” said group chairman Sir Victor Blank.

“Our higher quality, lower risk, business model has been clearly demonstrated in the resilience of our earnings stream.”

The bank today said its annual income growth of five per cent reflected the “strength and resilience of the group’s revenue base”.

A statement insisted the bank had maintained “strong liquidity and funding position[s]… throughout the recent global financial markets turbulence”.

Although annual profits would have shown a six per cent drop if the sale of businesses including Abbey Life were left out, Lloyds TSB chief executive Eric Daniels said the bank’s policies following the collapse of the US subprime lending market had shone through in its results.

“Our lower risk strategy limited the impact of the abrupt change in the markets,” Mr Daniels argued.

“Consequently, our charge was relatively modest in comparison to our balance sheet size, our earnings and the charges taken by many other organisations.”