HBOS on course for £5.8 billion profit

by Gill Montia

Story link: HBOS on course for £5.8 billion profit

In a trading update, HBOS, the UK’s fourth largest bank, has reported that it is writing down just £180 million in connection with the credit squeeze.

The bank’s chief executive, Andy Hornby, confirmed that profits and costs for 2007 will be in line with market expectations and that the bank’s full-year profit forecast of around £5.8 billion still stands.

In addition, the bank has recovered its share of the UK mortgage market and estimates that it provides around 18% of net new lending to mortgage borrowers.

However, amid reassurances that: “HBOS is set to deliver a good full-year outcome despite the dislocation in global financial markets” the bank’s share price fell yesterday, as the market reacted to the admission that HBOS’s UK business still has £430 million of exposure to US mortgage debt.

It also expects profit from its insurance business to fall by around £140 million in 2007, as a result of this summers flooding across the UK.

Finally, the HBOS statement referred to the current “global market dislocation” continuing in the short-term and as a result the bank will be taking a “prudent” approach to lending in the coming months.