Banking giant Lloyds TSB has shrugged off the credit market turmoil that has rocked many of its rivals as it posted a 6% hike in annual profits to £3.92 billion.
The group reported a £280 million hit from the credit crunch - a fraction of the £1.6 billion revealed earlier this week by its high street rival Barclays.
Lloyds said its "prudent approach to risk" had helped it weather the wider market troubles, but cautioned that the industry was facing a turbulent 2008 amid slowing global economic growth.
The 6% rise in underlying pre-tax profits - up from £3.71 billion in 2006 - is marginally higher than markets had expected.
Lloyds added that, excluding the credit-related impact, profits were up 13% at £4.2 billion.
The group, which also owns Cheltenham and Gloucester and Scottish Widows, reported lower levels of customer defaults, with bad debt charges within its UK retail arm dropping £14 million to £1.22 billion.
And Lloyds said it did not expect to increase impairment provisions in the first half of this year as it continues to see lower levels of customers falling behind with repayments.
Friday's £280 million hit from the credit crunch is £80 million higher than the losses reported at the end of October.
Eric Daniels, group chief executive of Lloyds, said that while the group had not been immune to the credit woes, it had limited exposure to investments affected by the tightening in credit conditions and the collapse of America's sub-prime mortgage market.
He said: "Our lower risk strategy limited the impact of the abrupt change in the markets and, consequently, our charge was relatively modest in comparison to our balance sheet size, our earnings and the charges taken by many other organisations."
