HBOS profits rise 17 per cent

08-08-2006

Britain's fourth-largest bank, HBOS has announced a 17 per cent rise in half-year pre-tax profits.

The bank said that profits for the six months to the end of June reached £2.65 billion, with the company now set to increase its share buyback scheme to £1 billion in 2006, up from the £750 million originally planned.

HBOS reported that its estimated share of the UK mortgage market had increased to 22 per cent over the first half, up from 21 per cent in the same period last year.

It said that an additional 400,000 people had also opened current accounts with the bank during the first six months of 2006, representing a 29 per cent rise on the same period in 2005.

HBOS revealed that during the first half of the year it had "illustrated the value" of prioritising growth in product areas that provide "the most attractive returns".

"This strategy saw us deliver strong growth in mortgages, investments and in our international operations," said the Edinburgh-based company in a statement.

It stressed that its savings and investment products continued to perform "strongly" with growing consumer awareness about the need to provide future financial security fuelling confidence about the prospects for such markets.

The bank added that it had been "deliberately cautious" in unsecured lending, as bad debts on unsecured loans continue to rise as consumers struggle to repay borrowings.

HBOS said that with retail sales, house prices and the economy all performing better than expected, a rise in interest rates was increasingly likely.

But the bank indicated that such a move would have a "modest" effect on its prospects.

Yesterday HSBC announced an 18 per cent rise in its pre-tax profits to £6.7 billion, in a week where all the major UK banking groups are expected to deliver soaring returns.


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