Leahy chides banks as Tesco profits leap

Chief executive Sir Terry Leahy insisted the economic crisis may not be as bad as feared, but took a swipe at the banks for taking their eyes off the ball.

"I think you've got to remember there is a real economy out there, as well as a financial sector.

"Clearly there is an economic slowdown, but the same number of consumers are out there, they just need different things," he said.

"The main task is for businesses to change their plans. For some it may be a small adjustment, for others it is huge."

On the banks he warned: "They need to get back to doing their job. They are supposed to provide liquidity."

He holds hopes for an interest-rate cut soon to ease the strain on consumers from inflation.

Tesco's personal finance arm is growing and is likely to pick up further business soon. It made £71 million in profit, up from £53 million for the same period last year.

Industry analysts believe the supermarkets group is losing small amounts of market share to the new breed of super-cheap rivals such as Aldi, but the evidence suggests Tesco is also picking up custom from the higher end as ­affluent customers look to cut costs.

Tesco has launched a discount range and says customers who are trading down have no need to shop elsewhere.

Tesco's US arm Fresh & Easy ran up losses of £60 million — roughly as expected. Sales across the group rose 14% to £28 billion in the 26 weeks to 23 August. An interim dividend of 3.57p, a rise of 11%, will be paid.

Until recently supermarkets were the focus of pressure from the government and regulators amid fears they were anti-competitive.

Sir Terry said he believes this pressure had eased.