LLOYDS TSB saw its profits leap seven per cent to a bumper £3.9bn last year.

The figure compares with the previous year's £3.6bn, while total income also increased seven per cent to £8.5bn.

Lloyds, which is awaiting a decision on whether its £19bn bid for Abbey National will be referred to the Competition Commission for an investigation, had previewed its full-year figures when it made its bid on January 31.

Sir Brian Pitman, Lloyds' chairman said: "2000 was another successful year for the Lloyds TSB Group, with profit, earnings per share and economic profit all at record levels.

"At the same time, we are investing heavily in e-commerce and restructuring to enhance future earnings."

Lloyds added 2000 was a "watershed year" for the financial services sector, which heralded "dramatic change in the use of technology, driven by the Internet".

The group said the year had seen a significant increase in competition, from both traditional players and new entrants, while it also saw strong Government interest in the industry, with the Cruickshank report.

Chief executive Peter Ellwood said: "Against that background, we believe that the organisations which will survive and prosper in this changing environment will be those which maximise shareholder value by creating real value for their customers."

Commenting on the offer for Abbey, he said: "We also intend to participate in the further consolidation of financial services, both in the UK and overseas.

"Our recent proposal for Abbey National to join the Lloyds TSB group would, we believe, greatly enhance productivity and the ability to deliver value to shareholders and customers, defend our market position and put us in a stronger position to pursue our overseas aspirations."

Lloyds figures also showed customer lending grew 12 per cent to £114bn, while customer deposits rose eight per cent to £101bn. It also has more than 1.2 million online customers