5 May 2010 | Andy Allen
Combining procurement has helped the merged Lloyds TSB and HBOS banks return to profit this year, the group has reported.
Lloyds Banking Group announced it would return to profitability far sooner than expected. It also said it would achieve nearly £2 billion in savings as a result of the merger between Lloyds TSB and HBOS. When the tie-up was first announced Lloyds envisaged savings of around £1 billion, but has continued to raise expectations, last year estimating it could achieve £1.5 billion efficiencies by 2011.
Savings of approximately £766 million will be achieved by removing duplication, improving procurement, and making changes to the group’s property estate portfolio, the bank said in its annual report for 2009.
So far this year procurement cuts have contributed £127 million to savings. “With approximately £1.5 billion of spend having gone through e-auctions, the group has in parallel reviewed and consolidated key supplier contracts, with over 90 per cent of spend now being through its top 1,000 suppliers,” the report said.
“The group’s strong track record of effective cost control continues to yield benefit and the integration programme is progressing well.”
In 2008 Lloyds saved £34 million through its tie-up with HBOS, the company said.