HBOS profits soar to £3.77bn
HALIFAX Bank of Scotland today became the latest bank to report record profits and immediately moved to quash accusations of profiteering by pointing out that 2.6m of its ordinary customers would benefit through bigger dividend cheques.
The banking group, Britain's biggest mortgage lender, lifted pre-tax profits by 29% to £3.77bn.
A final payment of 20.6p means dividend cheques of £77.66 in May for the millions of customers who have an average 377-share allocation as a result of the Halifax demutualisation. HBOS is Britain's most widely held share.
Chief executive James Crosby reported profits growth in every division, including the huge mortgage operation, and promised higher shareholder returns in 2004 and beyond.
But he also signalled a clear warning that the booming housing market was coming to an end, saying: 'There is no room for complacency. We have, and will continue, to tighten our lending criteria.'
HBOS, which sold 25% of all net new mortgages last year, plans to ease off the throttle, and said it was now aiming at or below its historic market share of 23%.
Banks are being accused of squeezing excess profits from their customers through anti-competitive practices and misleading terms and conditions.
Barclays, Royal Bank of Scotland and Northern Rock have all posted record profits in the past few days and the entire sector is on course for pre-tax profits of £26bn.
Booming demand for mortgages, credit cards and new current accounts boosted the group, while the outlook for defaults remained benign.
Even so, HBOS lifted its bad debt provision to £1.025bn from £832m. Non-performing assets were unchanged at 1.75% of the loan book.
City analysts were expected to focus on the key net interest margin figure which narrowed by 0.06% to 1.77% because of an acceleration in the growth of deposits and an increased requirement for wholesale funding.
Its online bank Intelligent Finance reached break-even at the end of 2003, said HBOS, which is the product of the 2001 merger of Halifax and Bank of Scotland.
Total retail profits were up 19%, the corporate division achieved 21% growth, small business banking was up 32% and insurance and investment was up 51%.
Britain's fourth biggest financial services business, HBOS's operations include Birmingham Midshires, Clerical Medical, Intelligent Finance, Lex Vehicle Leasing, eSure insurance and St James's Place Capital as well as the Halifax and BoS brands.
HBOS emphatically rejected suggestions that it was making excess profits from its customers, citing its market-leading rates on credit cards and current accounts and its newly launched savings account offering depositors 6%.
