HIGH street bank Lloyds TSB yesterday unveiled a record 12 per cent leap in half-year profits.

In the six months to June 30 the bank said profits before tax had risen to £2.07bn, up from £1.86bn in the same period last year.

Profits from Lloyds UK financial operations were up 17 per cent to £1.43bn, from £1.22bn in the first half of 1999 despite stiff competition in the sector from other high-street banks and from new Internet banks.

Group chief executive Peter Ellwood said the arrival of the Internet meant banks were at a crossroads.

''The financial services sector in the UK, as in many other parts of the world, is at a watershed created by a rapid change in technology, principally driven by the Internet.

"This has created a dramatic increase in competition and the increasing requirements of customers,'' he said.

All the high streets banks are striving to take the lead in the rush to so-called e-banking. Many are offering better deals to customers than traditional branches.

Lloyds saw profits at its network of UK banks rise by six per cent to £391m, although an increased investment in Internet banking increased costs by five per cent. Lloyds added that it now had the largest telephone banking network in the UK, with 1.8 million customers and 500,000 Internet customers, expected to rise to one million by the end of the year, giving the bank an estimated market share of 20 per cent.

The period also saw the first contribution from insurer Scottish Widows, which Lloyds bought last year for £7bn.

In the six months, Scottish Widows contributed profits of £70m to the business, although Lloyds spent £15m integrating the business.

Stiff competition in the mortgage market led to lower profits in the period, which were down four per cent, or by £16m, to £429m.

But Lloyds said these profits were still higher than those seen in the second half of 1999.

Profits from Lloyds' international banking operations were up £40m to £263m.

The group has also appointed Maarten van den Bergh, former president of Royal Dutch Petroleum, as deputy chairman, taking over from Sir Brian Pitman, who is to retire next April.

The interim dividend to be paid to shareholders will be 9.3p, up 15 per cent from last time's 8.1p