HBOS allays fears over rising bad debts |
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Fri, 03 Jun 2005 03:50
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Close on the heels of similar reports from rivals Barclays, banking giant HBOS revealed that bad debts had risen but were in line with expectations. The bank also said that first-half profits were growing.
HBOS was formed four years ago after the merger of Bank of Scotland with Halifax. The bank is the biggest mortgage lender in the UK. Seeking to reassure investors, the bank issued a statement saying, "Retail credit trends continue to develop as anticipated. For HBOS, non-performing retail assets have therefore continued to increase, in line with previous guidance." Finance director Phil Hodkinson added, "The message is that there is no new news... In relation to unsecured and credit card business we are seeing very much the same trends as we saw in 2004."
| HBOS described its first-half revenues as being "usefully ahead of last year", while profit margins continued to be stable and costs were under control. The bank's net mortgage lending was pretty strong and the first-half market share was similar to 2004. In contrast to Barclays statement last week, HBOS has sought to allay fears, which has gone down well with analysts, Alex Potter, a banking analyst with Lehman Brothers, commented, "In terms of unsecured credit, there were some issues in the business written in 2002 and 2003 but they have sorted a lot of that out. It’s not like there is a big systemic issue for them."
James Eden, banking analyst at Dresdner Kleinwort Wasserstein, added, "Barclays continues to argue that slower growth versus peers (HBOS) mainly reflects lower risk. We think HBOS is growing faster than Barclays because HBOS is a better bank with better advertising, better branding, better product design, better sales culture and better management, not just because it has moved up the risk curve."
In the backdrop of this news, HBOS’s shares lifted 12p to 812.5p.
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