HBOS puts profitability above market share

by Gill Montia

Story link: HBOS puts profitability above market share

HBOS has posted a 3% rise in underlying pre-tax profits, to £5.71 billion, for 2007.

However, the result is below market expectations of £5.76 billion and was accompanied by a warning of continued uncertainty in the financial markets.

New mortgage business increased 22% in the second-half of last year but the bank says it will be putting profitability ahead of market share, explaining: “We are planning on the assumptions that market conditions will remain uncertain throughout 2008.”

HBOS was reassuring about its funding position: customer deposits increased 15% in 2007, to £243.2 billion, and the bank describes its wholesale funding position as “remaining strong”.

Bad debt charges rose 18% last year, to £1.29 billion, although losses were lower in the second-half of 2007, following a review of lending criteria.

Write downs on asset-backed investments affected by the credit squeeze amounted to £227 million, and HBOS has reiterated that it has little direct exposure to the US sub-prime mortgage crisis.

Finally, the bank’s general insurance business recorded a 24% decrease in profit in 2007, to £232 million, as a result of claims from last summer’s flooding.