Lloyds TSB today pledged to resume paying a dividend to shareholders by at least 2009 after repaying £4 billion to the Government as part of a £17 billion taxpayer-funded package to rescue HBOS, owner of Halifax and Bank of Scotland.

Under the Government's £37 billion plan to bail out part of the British banking system, it will buy preference shares in lenders, meaning that it must be paid back before ordinary shareholders may receive dividends again.

In a document to shareholders detailing its bid for HBOS, Lloyds TSB said that today its "clear intention" is to repay the preference shares "during 2009". If Lloyds repays the sum by August 2009, shareholders will be entitled to a dividend later next year.

Details of the rescue bid for HBOS emerged today, including the combined companies' new name — Lloyds Banking Group — as Lloyds TSB gave an update on trading, admitting that pre-tax profits in the first nine months of the year would be substantially lower.

The lender, which may be facing competition from a rival bidder for HBOS, today blamed continuing turmoil in the global financial markets for a £270 million fall in third-quarter profits.

Lloyds TSB also predicted that it would make £300 million of additional write-offs when it reports its full-year results.

At the same time, HBOS revealed that the value of its assets plunged by £2.7 billion in the third quarter, taking the embattled bank's total charge for the year to £5.2 billion.

Collapsing commercial property markets largely prompted a £1.25 billion writedown on the company's business loan book.

HBOS said that an increasing number of business customers were "operating under stressed conditions" with "construction and real estate sectors...impacted more severely".

Lending to property-related businesses accounted for 60 per cent of the write-off.

HBOS also lost £732 million during the quarter on its trading book, including £457 million from its exposure to Lehman Brothers, the collapsed US investment bank, and stricken Washington Mutual.

A further £150 million hit is expected on trading conducted with Iceland's crisis-hit banks.

Despite HBOS's writedowns, Eric Daniels, chief executive of Lloyds TSB, said today that the current offer to pay 0.605 Lloyds TSB shares for every HBOS share will go ahead after it was forced to revise the offer because of the continuing economic turmoil.

Last week, Jim Spowart, the former chief executive of HBOS’s Intelligent Finance division, emerged as a new potential bidder for HBOS.

But yesterday, Mr Spowart admitted that he had been approached by an “international financial institution” with a view to brokering a bid for the bank that would trump the Lloyds TSB offer.

Despite a fall in third-quarter profits, Mr Daniels was upbeat, saying that the bank would "deliver a good trading performance during 2008, notwithstanding lower statutory profits as a result of market dislocation, insurance-related volatility and higher impairment charges".

Falling house prices and a rising level of arrears mean that the bank expects to take a £120 million hit on the value of its mortgage book. Lloyds said it expects the value of homes to fall by 15 per cent during 2008.

The number of households behind on their mortgages increased by 14 per cent over the year to September 30, but the bank said this was lower than the market average of 34 per cent.

Lloyds shares fell 2.9p to 194.9p while HBOS's rose 7.3p to 106.7p after the results were announced.

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