Lloyds TSB has seen annual pre-tax profit fall 6% to £4 billion, but credit crunch-related write-downs are nearly six times less than its high street banking rival, Barclays.

The bank has reported a £280 million hit from the credit crunch. In comparison, Barclays revealed a £1.6 billion write-down earlier this week.

Lloyds TSB has taken the crafty route of promoting adjusted figures, which explains why most internet sites are reporting a rise in profit. If you read the small print, the positive results have actually been repositioned to exclude the nasty parts and one-off gains.

The bank has excluded volatility and losses made from settling on unfair overdraft claims. In its defence, it has also omitted profit from selling the Registrars and Abbey Life businesses and pension credits.

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 £1.2 billion.

Chief executive Eric Daniels 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.

'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,' he said.

Pre-tax profit at the UK retail banking business increased by 12% to £1.73 billion. Over the past year, 4,500 jobs have been cut to keep costs under control.

The bank continues to seek growth, particularly in mortgages and customer deposits. Panmure Gordon analyst Sandy Chen said: 'Adding up the potential write-downs on structured credits and the challenging macro environment leads us to continue to expect a mild slippage in earnings in 2008, followed by single-digit growth in 2009.'

Lloyds TSB has increased its dividend by 5%, which should appeal to investors who were initially attracted to the company's historically generous yields.

'While the picture cannot be said to be as rosy as it was 12 months ago, these results amply demonstrate that UK banking is still a very profitable industry and should remain so,' said Hichen Harrison analyst Magnus Mathewson.

'While we cannot justify the current premium to Royal Bank of Scotland and Barclays, we would nevertheless be reassured by the figures and cannot see much downside from here unless economic conditions worsen significantly, especially with the support of a 7.9% yield.'

Shares in the bank rose 6% to 463p.